If you’ve never budgeted before, the task of creating your first budget can seem HUGE. I agree: it’s not for the faint of heart. Switching from serial spender to serial saver takes a lot of work and dedication. In order for budgeting to be successful, you need real numbers that you can access often. This is why I’m a strong believer in making budgeting as electronic as possible (less paper, the better!)
I do this through Mint, an amazing budgeting app that makes the chore of budgeting pretty mindless, easy, and automatic.
So how do we set ourselves up for success?
Keep it simple and take it month-by-month. Essentially, know how much you’re making each month and don’t spend more than that.
The first budget is the toughest because if you’ve never tracked your spending before, you probably won’t really know how much you spend each month on things like groceries or coffees. This is why the electronic method is so helpful.
Okay, simple enough… but how do you even start?
You need the right tools and key pieces of information to review and analyze your past spending habits and income. The method I use and find the easiest and most convenient is using the Mint App. There are many approaches, but this is the method I’ll focus on in this tutorial.
Creating Your First Budget
- Access to your credit card and bank accounts online.
- The budgeting app Mint.
Armed with the above tools, you’ve got everything you need to sit down and START. Follow these steps to create your first budget.
Step 1: Gather your information.
You need to be aware of every penny going in and going out of your account. How do you do that?
If you’re not banking online yet, you really should consider it. Not only is it super convenient, but it’s an awesome way to see all of your transactions at a quick glance.
The bank I have my checking and savings accounts with are also where my credit cards are from. I can see every transaction all in one place.
Every major bank and credit card has an online banking option so either go to your bank’s website and set up an account or visit your nearest branch to inquire about how to go about setting your online account up.
Step 2: Build a budget based on the numbers.
- Download the Mint App. This app is by far the most user-friendly and perfectly suited to this purpose.
- Plug in your spending limits for the pre-made categories. This first month, you’ll likely not be 100% accurate. That’s perfectly fine: just give it your best guess.
- Begin to track your expenses. You can either link your online credit card or bank accounts to this app (absolutely safe! I’ve been doing this for 10+ years and have had no issues) OR enter each transaction manually as they occur. If you link your accounts, each transaction will automatically flow into the app and update the budget categories. This isn’t 100% reliable as sometimes the App can take a few days or weeks to refresh and can sometimes put the expense into the wrong category budget.
Step 3: Do a review at the end of the month.
Apps like Mint capture your spending as the month progresses. By the end of the month, you’ll be able to see:
1. where you went over, under, or met your budget and
2. how much you saved that month by subtracting your expenses from what you made.
Making a budget is a big step towards providing you and your family financial security. We all wish we can just buy what we want, when we want, but the reality for many of us is that we end up falling deeper and deeper into debt when we do so. Realizing you’re spending more than what you’re actually making is a scary wakeup call, but a necessary one.
Budgeting opens your eyes to what lifestyle you can afford and the lifestyle you can have someday if you save accordingly. Set it up mindlessly (and automatically) with Mint and try it for a few months. You’ll be fascinated with the numbers, and even how fun budgeting can be.