4 Easy Budgeting Techniques

For some people, budgeting money comes naturally; they like being organized and tracking data. For others, it’s a bit more challenging. Facts and figures aren’t their forte and constant monitoring is tedious. Even if you fall into the latter category, the process can be made easier with a few quick tricks.

Here are four easy techniques that will make budget planning a breeze.

1. Automate Your Tracking

There's no real reason these days to save your receipts in a pile and wade through them later. There are apps for that.

A smartphone app or software program can help you track your budget. These programs often use the same security systems that online banks do, so if you choose a reputable tracker, you should not be concerned with the safety of your information.

The programs will not only track your spending but will help you categorize your purchases, send you alerts when you are nearing your budget limits, and help you set long-term financial goals and keep to them.

2. Automate Your Spending

Automatic bill payment and automatic transfers of money into a checking account can take some of the difficulty out of sticking to a budget.

After all, if you never see the money in your checking account you won’t spend it on things that are not in your budget. Just be sure to keep enough funds in the account to cover your automated expenses so that you aren’t hit with overdraft fees. 

Coordinate Deposits and Withdrawals

One way to avoid this risk is to set all automatic withdrawals to hit at the same time that your paycheck is deposited so that your money goes directly toward the bills and your savings goals at a time that you know you will have sufficient funds in your account.

Some employers will even direct deposit a designated amount into a savings account each pay period while putting the balance into your checking account.

3. Be Flexible

Your budget has to be flexible enough to absorb some of life's nasty little surprises. Inevitably, unforeseen expenses will come up and bust your budget.

It's important to recognize that a budget is a tool that can be adjusted if it isn’t aligning with your spending.

If you go over budget a few times, don’t beat yourself up. Instead, plan for a slightly larger emergency fund as a cushion. If you continually go over, it’s time to reassess your spending. You're paying out more than you can afford and you need to make some adjustments.

4. Consider Your Future

Most people understand the difference between wants and needs when it comes to budgeting. However, many people incorrectly place savings in the optional spending category.

The Bottom Line

Planning for your retirement, building an emergency fund, and saving for long-term goals are all critical for your financial health. They should not be considered optional expenses that can be eliminated when they're inconvenient.

Even if it means forgoing dinner out or cutting the cable bill, saving money needs to be a mandatory part of your budget. You want to be financially prepared to meet your long-term goals, whether you want to buy a house, travel the world, or pay off debts.