Whether you’ve been meaning to create your first budget and finally carved out the time or you’re just sick of hearing about why you need a budget, you’ve decided that you do, in fact, need to start budgeting. For the uninitiated, this can be an intimidating process. There are countless experts across the web that will tell you the “right” way to budget but we’ll let you in on a secret: there is no one correct way. That being said, there are a few guidelines to keep in mind as you learn to budget as a beginner:
- Always know how much money is coming in and out
- Lower your expenses or raise your income
- Be ready to adjust your budget as needed
Track your expenses.
As a brand-new budgeter, you probably haven’t looked too closely at the money coming in and out of your accounts beyond worrying about overdrafts or avoiding your bank app as if it might bite. Take a breath and pull out the past several month’s bank statements. Begin by listing your fixed expenses (those that stay the same, like recurring monthly payments).
Anticipate the “worst case” (aka most expensive) possibility for variable costs, or those that change, such as electricity or water bills, groceries, or household essentials. Do the same for your income, from your job as well as any side hustles or other income sources. Then, compare the two. Look into ways to increase your income, decrease your expenses, or both.
Evaluate your monthly bills and lower your payments, if possible.
You can’t lower every bill or payment but you can most likely make some difference. Are you paying more than you’d like to for a certain expense? With the competitiveness of their market, electricity providers, in particular, tend to charge more than you’d like to pay. To find a better rate, compare electricity providers with iSelect and find the best rate for you.
Just enter some basic information like your postcode, average energy use, and current provider and iSelect will compare rates to let you pick an electricity provider that will take up a smaller chunk of your budget. Compare costs similarly with your other bills, or reach out to your providers about the possibility of lowering your monthly payments.
Pinch pennies wherever possible.
You don’t need to spend a fortune to have fun. Cut back on unnecessary spending—do you really need to order dinner five nights a week? You don’t need to cut out everything that makes you happy, but narrowing your list of spending “wants” will inevitably trim your expenses and bulk up your wallet. When you do purchase those more luxurious items, buy used whenever you can. For example, Gently Loved Books can help avid readers fund their habit for less.
With free shipping on all orders, you can find classics or contemporary hits for the best price possible. For the cost of your daily latter, you can pick up nourish your love of books and find your new favorite book today. Plus, you’ll save even more when you pick up that book rather than a more expensive hobby. And books aren’t the only items you can buy used without skimping on quality: consider choosing used clothes, cars, or appliances.
Don’t be too hard on yourself.
There will inevitably be a learning curve as you start budgeting for the first time. You’ll grow more confident and skilled as you practice budgeting. Meanwhile, be sure you’re being kind to yourself. Mistakes will happen. You’ll need to make changes. The great thing about creating your own budget is that you’ve got the power to adjust it as needed. The important thing is that you keep going even if you’ve overspent or an emergency comes up. You can get through it and build a better budget for it.
When it comes down to it, you need to customize your budget to meet your needs. But, by tracking your transactions, comparing providers for the best rates, and opting for used items for those “wants” you just can’t live without, you too can become a master budgeter. Get ready for a new-and-improved relationship with money, and good luck!
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