When it comes to creating or improving upon a budget for yourself, your family and your household, the last thing you want to do is keep it all in your head.
That’s not a negative comment on your cognitive skills or intelligence; it’s just that when you write it all down and can see it with a bird’s eye view, you can get a deeper understanding of where your money is going, or where it could be going.
Many people would be surprised to see how they might be bleeding money by a thousand cuts: ATM and other banking fees, subscriptions they had forgotten about, restaurants, gasoline, that daily cup of joe (or three) at the coffee shop, cranking up the air conditioner or the heat, one streaming service too many, or more mani-pedis than are really needed. If you look closer, you could find even more cracks in your budget.
Here are nine steps to take that can help you to budget money better and get your budget in top shape, which could lead to more stability and excess money to use for your future.
Counting Only Your After-Tax Income
If you include your gross salary, you’re not doing your budget any favors. You can only work with the money that’s left over after your taxes are deducted; that’s called your net income. The money that was taxed goes directly to Uncle Sam. If you think you may be getting a tax refund or a bonus at work, wait until you actually get them before including them in your budget.
Recording What You Spend — to the Penny
The more accurate you can make your budget, the more you can understand how it’s helping or hurting you. Mortgage, rent, utilities, insurance, groceries, credit cards, loans, gas, and Internet are just a few of the facts of life.
Don’t round off to the nearest dollar; if pennies are involved in the charges, be sure to include them. The goal is to have more money coming in then what is going out every month. Once you have this figured out in dollars, you can start planning from there.
Instant gratification (buying that coffee or that restaurant meal) is nowhere near as satisfying as setting a long-term goal and saving for it. A special trip, a down payment on a car or a house, or even just building a nest egg can be done with better budgeting.
Try opening one account specifically for that one goal, and put what you can into it week to week or paycheck to paycheck — or whenever you can. You’ll likely become even more motivated when you see that account grow as you grow closer to your goal.
Getting Granular and Detail-Oriented
Your cash can jump out of your hands in ways that you often don’t even realize. ATM fees, tips, a quick Uber ride, buying a buddy a coffee, or a bag of peanuts at the convenience store can start to add up. Be sure to save receipts and include these spends on your budget chart. To help keep track of your spending, get started with SoFi Relay. SoFi Relay tracks all of your money, all in one place.
In essence, write down everything you spend, and try to record them as they happen, or at least on the same day. This way, the receipts won’t pile up as much and make you feel reluctant to continue on. Becoming conscious of these little costs during the course of your day can help you start thinking about getting more budget-conscious and thrifty, and on your way to budget better.
Saving for the Inevitable
Christmas comes at the same time every year. So do birthdays. And Valentine’s Day. Figure out what you may be spending for those events that always seem to creep up on you without warning, and make an attempt to save a little each week toward those goals.
Trimming the Fat
Once you start getting a better idea of how your existing budget is, you can start getting creative with where you can cut the unnecessary costs.
It could be as simple as eliminating a premium cable or Internet subscription, or keeping the a/c at a slightly higher temp. It sounds painful, but once you start cutting, it may actually feel good, and you may get tempted to keep going.
Paying Yourself First
You always want to have enough money in your budget to cover your most important expenses (rent/mortgage, health insurance, utilities), but consider getting into the habit of putting a percentage of your earnings into your savings. If you do this first, you may not come up short when it comes time to dip into an emergency fund.
Get into the habit of paying attention to your better budgeting every single day. Do everything in your power not to trail off. It’s so easy to skip one month of your budget due to being especially busy or simply just life happening in general.
Skipping one month can lead to skipping a number of months, and then your better budgeting can become just a hazy memory in your rear-view mirror. Reaching your financial goals can be much easier when you have a plan and stick to it.
Getting Budgeting Help
Better budgeting is certainly not rocket science — spend less than you make — but many of us could use some help when it comes to money. Sometimes, the ultimate help is being able to step back and take a comprehensive view of where you stand.
One way to keep your better budgeting on track is with a SoFi Money® cash management account. It offers a great way to spend, save, and earn all in one product.
SoFi Money has no account fees. Plus, with your SoFi Money cash management account you’ll be able to see, on a weekly basis, what your spending looks like.
And you’ll get unlimited reimbursement on ATM fees, a high-interest rate, and all the benefits of a SoFi membership (fee structure and interest rate are subject to change at any time). This includes invitations to free exclusive member events and one-on-one career coaching.
Whether it be saving or investing, SoFi can help you get on track and reach for your financial independence. More than half a million members have already used SoFi to get their financial house in order and their futures more secure.
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