So far in this series, we’ve discussed what a budget is, what to include in a budget, and the different ways you can create a budget, including zero-based budgeting, which we discussed in Chapter 8. all the basics of budgeting, we discuss how to manage your budget.
Making your budget is crucial, but managing your budget may be even more important. You can’t just budget at the beginning of the month and never look at it again. You need to continuously manage your money with a budget to keep track of your finances for the month and plan your long-term goals.
In this chapter, we provide an overview of how to manage your money and how a budget can help you do so. We’ll discuss why money management is important, tips for managing your money, how to improve your money management and more. Keep reading or use the links below to jump directly to a specific topic.
What is money management?
Money management is essentially the process of keeping track of your finances. This can be your:
Spending Save Budgeting Invest
Money management is key so that you can save enough money to achieve your personal and professional goals. Everyone manages their money differently, so it’s important to find a management technique that works for you.
Why is money management important?
There are many reasons why it is important to manage money. It can help you:
Stay on top of your finances: If you don’t manage your money, there’s no way you can tell if you’re overspending before you get hit by the overdraft charges. Money management allows you to keep your finances in check so that you don’t accidentally end up with a credit card bill that you simply can’t afford.
Plans for the future: Whether you want to save for a down payment on a house or save for a wedding, money management can help you plan for your future. By managing your money, you can find out how much you need to save to reach your goals and how you can save it.
Track your expenses: Money management allows you to track your expenses, such as how much you spend on rent and groceries, so you can determine if you need to cut back on some expenses.
Feel safer: There is nothing worse than feeling overwhelmed when it comes to your finances. You don’t know if you can pay that next bill, and every morning you wake up with a feeling of overwhelming fear.
But money management can put an end to this feeling. Money management allows you to feel more secure and in control of your finances because you know exactly where your money is going every month.
5 Tips for Managing Your Money on a Budget
The best way to manage money is with a budget. It is critical to learn how to budget, such as with the 50/30/20 budget rule. We covered this technique in Chapter 7, so you can go back and read it again if you need a refresher.
Managing money may seem overwhelming at first, but you will soon get the hang of it. Below are some tips for successfully managing your money on a budget:
Take stock of your financial health
First things first: You need to take a deep dive into your financial health. This includes doing things like:
View your credit score and history See how much you’ve saved for retirement. Find out what your financial goals are and how far away you are from them. Calculate your total income, including income from your salary and additional sources of income. see if and where you can cut costs
Make a realistic budget
Once you have a better idea of your financial health, you can actually… make a budget for yourself† There are several ways to create a realistic budget:
Just find a system that works for you and stick to it.
You also need to figure out what to include in your budget, such as:
Rent Utilities Food and Groceries Daily Incidental Expenses Subscriptions Transportation
These are just some of the many expenses you will want to include in your budget. Everyone’s budget looks different and depends on where they live and what their personal situation is.
If you’re not sure where to start with your budget, it might be a good idea to calculate your cost of living so you can get an idea of how much it costs to live in your city. That way, you can calculate your rental budget and estimate for other expenses so you don’t overspend.
Your budget will likely look different each month as well. For example, if you are going on vacation, you should state how much you plan to spend on travel that month. To make up for those costs, you may need to cut back in other areas, such as the number of times you eat out.
Determine your financial priorities
Once you’ve created your budget, you can see where you’re succeeding and failing financially, and from there you can… determine your financial priorities†
After you set your priorities, you need to set goals. These could be personal or professional goals, such as buying a new home or increasing your salary.
It’s also important to think about ways you can achieve these goals. For example, if you want to buy a house, you need to figure out how much you need to save from each paycheck so that you can pay a down payment. If you’re looking to increase your income, it’s a good idea to negotiate your salary with your employer so you can find an amount you’re comfortable with.
Determine your goals first. Then create a path to reach them.
Using tools to track your budget
The easiest way to keep track of your budget with a budget tool. A budget tool allows you to keep an eye on your spending and savings so that you can keep your finances in check. This can be done with an app, a spreadsheet or a planner.
You can also create a budget with Mint. Mint’s budgeting app is one of the best ways to keep track of your budget for several reasons, such as:
It’s easy to use It keeps everything in one place It’s accessible 24/7 It automates much of the budgeting process It’s free
Check and review your budget regularly
So you’ve chosen a system to create and track your budget, but your budgeting journey isn’t quite over. You now need to review and revise your budget regularly.
You should review your budget at least once a month to see if it still fits your goals/current financial circumstances. If not, you can update and change your budget as often as you want!
That’s the best thing about having your own budget: it’s tailored to your unique situation. Remember that your budget should work for you, not the other way around.
How do I improve my money management?
Using a budget is without a doubt the best way to manage money, but there are some other ways you can try to improve your finances, such as by:
Build your savings Pay your bills on time every month Cut recurring costs Map out an investment strategy Stay informed about financial statistics
Doing any or all of the above is a great start to moving your financial health in the right direction.
Key points to consider: managing a budget
Money management is the process of keeping track of your finances, including your spending, saving, budgeting and investing. Money management allows you to keep your finances in check and plan for the future. The best way to manage your money is on a budget. It is important to set your financial priorities so that you can set goals. The easiest way to keep track of your budget with a budget tool. You will need to review and revise your budget regularly.
Don’t underestimate the power of a good budget
A good budget can completely change your financial situation and give you the feeling that you finally have your finances in order. It’s never too early to start budgeting. The sooner you start budgeting, the closer you will be to achieving your long-term goals.
After reading the previous chapters in the series, you should now have a much better understanding of what budgeting is and why it’s important to manage money. To wrap up the series and complete your budgeting knowledge, be sure to read the next and final chapter in the series where we’ll talk about setting your goals with Mint.
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This post Manage money | Chapter 9: Managing a Budget
was original published at “https://mint.intuit.com/blog/budgeting/managing-your-money/”