Before You Make a Budget, Do These 7 Things
You’re ready to start a budget — awesome!
You’re probably feeling excited and ready to get your money in order. But here’s the thing: It’s super easy to give up on budgets. They can get complicated and require some maintenance.
So before creating your budget, take these simple steps to set yourself up for success:
1. Track Your Spending
Sometimes it feels like each paycheck disappears into thin air. The money lands in your account, you revel in your balance for one day, then you pay your monthly bills.
That’s why it’s so important to track your spending. Before you even start a budget, you’ll want to get a clear idea of where all your money is going each month. There are plenty of ways to do this: good old-fashioned checkbook balancing, pen and paper or checking your accounts each day.
We prefer to let an app do the hard work. Get yourself used to keeping tabs on your spending by using an app like Mint or Personal Capital.
This will help you better understand what your fixed expenses are each month and where you might be overspending.
2. Set Yourself a Few Fun Goals
Because budgeting can quickly become a dreaded chore, you’ll want to set yourself a few goals to keep you encouraged.
No, these don’t all have to be boring financial goals, like paying off student loans or starting an emergency savings. Although those are great, work in a fun goal, like a road trip to Maine or a cruise to the Bahamas.
Then, hold yourself accountable by using a free savings app like Dobot.
Once you download the app, connect your checking account and set your goals. You’ll add a photo to visualize your goal and give it a name. Make it exciting!
Then Dobot goes to work and will determine small (and safe!) amounts of money to withdraw into a separate, FDIC-insured savings account. The purpose is to boost your financial health, so Dobot won’t ever withdraw too much — it ensures you’re left with enough money to meet your spending needs as you save.
Bonus: Get a free $5 bonus toward your goals once you complete your first transfer.
With these goals top of mind, you’ll be more determined to maintain your budget.
3. Bundle Your Debt Into One Bill
No, like… the whole bill. All of it. All that debt racked up from the 300 destination weddings your friends made you attend (thanks!) could be paid by the end of this month.
Your credit card company is ripping you off with insane rates, and it’s getting rich off of you. But there are other, nicer companies that’ll help you out. A website called Fiona knows the best ones and could pair you up as soon as tomorrow.
Here’s how it works: Fiona will match you with a loan that’ll cover your credit card tab. Use that loan to pay off your debt, then make monthly payments to repay the loan. It could lower your monthly payments and help you pay off that debt a lot faster. Plus, no credit card payment this month.
Fiona won’t make you stand in line or call a bank. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could save you thousands of dollars. Totally worth it.
Now you can finally stop holding a grudge against that friend who thought a Mexico wedding was a good idea.
4. Find Easy Ways to Cut Back Big Bills
Have you been paying your car insurance bill to the same old insurance company for years? You’re probably paying too much.
Over the years, your life has probably changed — and so has the value of your car. Plus, insurance companies you might have looked at years ago are constantly changing their pricing. One easy way to save on car insurance is by shopping and comparing rates twice a year. But that sounds like a pain.
Fortunately, a service called Gabi will do it for you, and you don’t even have to fill out any forms. Simply link your insurance account and provide your driver’s license number, and it’ll go to work.
Gabi says it finds an average savings of $865 per year for its customers.
It offers a true apples-to-apples comparison at the same coverage levels and deductibles you currently have, and instantly compares rates from up to 20 providers to find you the best deal. Once you sign up, you never have to shop again. Gabi’s software has your policy on file and keeps on monitoring for savings as your life changes.
5. See if Your Cell Phone Company Owes You $80
When’s the last time you negotiated your cell phone bill? Your provider could be overcharging you…
In fact, there are secret discounts it doesn’t want you to know about.
But a tool called Truebill knows how get them for you. William Ellis, a savvy saver from Indiana, was able to get $80 a year back in his pocket when he used a negotiation tool to convince Sprint to lower his bill — for the same plan. He didn’t even have to pick up the phone.
You can find out how much you’re overpaying by signing up for Truebill. Then, Truebill handles the rest.
Truebill takes an upfront commission on any money it recovers for you, but there’s no charge if it’s not successful.
6. Pick Your Go-To Budgeting Method
Yes, there are budgeting methods — plural — but before you panic, we recommend using the 50/20/30 budgeting method for its simplicity.
Here’s how it works:
- 50% of your income goes toward essentials.
- 20% goes toward financial goals.
- 30% goes toward personal spending.
Of course, you’ll want to play around with this, but keeping these base-line percentages in mind will help you figure out how to allot your money for the month.
7. Copy This Strategy to Add $526 to Your Budget
Once you start budgeting, you’ll find yourself looking for ways to pad certain areas with a little extra money. How does $526 sound?
Try copying this woman’s money-making strategy. Ever since Colleen Rice started using a free website called Rakuten, she’s received $526.44 in checks in the mail.
Rakuten has the hookup with just about every online store you shop, which means it can give you a kickback every time you buy toilet paper on Amazon — even book that flight home for Thanksgiving.
Rice says she uses Rakuten for things she already has to buy, like rental cars and flights. She even used the money she earned to help her pay for her recent cross-country move.
It takes less than 60 seconds to create a Rakuten account and start shopping. All you need is an email address, then you can immediately start shopping your go-to stores through the site.
Plus, if you use Rakuten to earn money back within the first 90 days of signing up, it’ll give you an extra $10 on the first check it sends you.
If you create a budget and realize you need some extra wiggle room, this is a great option to passively boost your income.