Learn how to budget wisely right now! 

Budget—such an iconic word that makes everybody annoyed every time we see it mentioned! And that’s for a reason. Since it is very important to know how to do it correctly, especially during these hard times that we’re living today, we’re going to learn the steps to success: how to budget smart exactly like a professional.

I know that you might think that budgeting will limit your freedom and that, in the end, you will be disappointed, but let me tell you a secret: a budget actually provides you with freedom rather than limiting it. Being mindful with your spending is actually the key.

If you’re at the beginning of the road, don’t fret because we’re here to help you understand the process, and by the end of the article, you will definitely hate this term less.

1. Decide why you want to do it

First of all, think about why you want to start budgeting. Do you want to go on vacation? Or maybe you want to buy that specific car launched last year? Or are you in debt and you want to pay it off as soon as possible? Whatever your reasons, this must be your first stop before moving forward to the next issue. After setting your goal(s), it will be much easier to follow through and stick to your plan.

If you are planning to do this together with your spouse or your partner, discuss all the details to know exactly if you are on the same page or not.

2. Consider cash envelopes

As I previously mentioned in my older articles, I am an old-school person who likes saving money on cash in separate envelops for any of the monthly bills, mortgage, groceries, and other stuff. This actually helped me spend less money on groceries, for example, since I must go two times a week because I have a big family that’s eating a lot!

After you set a specific budget for each expenditure and you’ve spent them, the budget is gone. By doing this, you won’t spend more money for that need. In my case, and I recommend this very kindly to you too, save all the receipts in each of their respective budget envelopes. If the electronic method helps you, you can also make Excel spreadsheets to keep track of your spendings. This is one efficient method for budgeting that helped me when I was a beginner in this field!

3. Remember that every month is different

You’ll see that the road is not very smooth as you follow the path of budgeting. Some months will be pretty bumpy because of expenses like annual car maintenance or because a member of your family got sick and you may need extra money for the meds. You never know what can show up out of nowhere; that’s why it’s better to be prepared and have an extra envelope for “surprises.” Other months you may be able to save money for that long-awaited vacation, holidays with the family, or even birthdays because everybody likes gifts, right?

Make sure you adjust your budget each month accordingly; otherwise, you will be stressed!

4. Experiment with various budgeting techniques

Testing out what fits you best is one of the essential things you must do when you start budgeting. While I use the cash payment method all the time, others may prefer to keep track of their expenses on a bank app on their phone because they don’t want to walk around with cash in their pockets. And that’s perfectly fine! Everybody is different, so picking the best budget method for you is a wise thing to do.

The secret to winning is to just persevere and acknowledge how difficult the first few months are, and the most important thing is not to give up! Explore different choices if you give it a fair attempt but are unable to make it work. Be practical and move on to something else you believe will have an impact.

5. 30% of your money should be designated for fun activities

No matter if you’re still employed in a 9 to 5 job or you’re a fresh retiree, we still need to have fun! Do you want to go to a movie this weekend? Or do you want to buy a new Xbox game that’s on sale? Assigning 30% of your monthly income to a “fun activities” budget will allow you to indulge in some moderate overspending. If you have more money, you can treat yourself to more delights while still saving!

6. Pay all your debts

Debts are horrible! Especially if you’re planning to budget your money. But it is crucial to pay them off in order to be able to save money for the future. I know it’s hard, but this must be your number one priority! Don’t let banks steal your income, the only thing that helps you be in control of your life. If you have the possibility, you definitely should pay it as soon as possible. If you’re married, talk about this with your spouse and see how you can solve this issue together.

7. Always keep track of your progress!

If you set a goal, you should review your progress every month. In case you’re married, talk to each other to see where you are with your budget and, depending on the final goal, adjust it along the way. Consider ways to save costs or perhaps even find more money to enable you to accomplish your objectives more quickly.

Also, remember to recognize and appreciate even the smallest victories.

8. Be wise everyday

You must be aware that even the smallest expenses can mount up while trying to stick to a budget. Over the course of a year, for example, your coffee and muffin for takeout might cost you hundreds of dollars. Spend one minute each day checking on your bank transactions to keep track of these costs. This can assist you in tracking your objectives, spotting issues, and planning your purchases for the remainder of the day.

9. Try out an online budget tool

In my case, I prefer to write everything down on paper because it helps me keep track of everything better, but that’s just me! If you’re a modern person, there are a ton of budgeting apps that you can install on your smartphone. And if you’re budgeting with a friend or with your partner, you can sync up your budget to see where you stand with the goal and what adjustments you need to make.

One of my friends told me about Mint and Goodbudget, both of which are free. And also, EveryDollar was recommended by a lot of other friends who prefer to keep track of their expenses on their smartphones.

Which method do you prefer? Tell us in the comments!

10. Be happy with your progress and quit the comparisons

Last but not least, be proud of how far you’ve come! Even if it’s just a small progress, it’s still a progress, and you should definitely be happy with it. And the most important thing: never compare yourself to other people. I know it’s hard not to do it, especially because of social media, on which everybody has to show off themselves, and sometimes this can be very overwhelming.

Comparing will steal not only your happiness but also your income. Go forward and take care of your family’s best interests!

If you’re interested in more brainy advice, check out this amazing article: 7 Bills You Should NEVER Put on Autopay.