I know you are thinking from the title that there is no way a budget can be simple. Especially if you hate the thought of numbers! If you stick with me in this article, you will see taking some small steps can help you simplify your budget. It can be painless too!
Finances have a knack for becoming complicated. Making your budget as simple as possible will allow you to get a better handle on your finances so that you can focus on matters that are more important. Simplifying your budget can have positive effects on all aspects of your finances by helping you keep everything under control.
Stressing out over your finances is a waste of your time, so let’s make it a point to stop that today, okay?
Follow these 10 steps to make your budget easier for you to work with:
1. Start simple. Like working with spreadsheets? Keeping things in a spreadsheet can simplify your budget significantly. Set it up however you like or download a free template for Excel or Google Docs; just choose something that works for you. Not so high tech? That’s ok, a simple pen and piece of paper can work wonders too. Check out my article How To Build A Monthly Budget The Old Fashioned Way: With A Pencil and Paper to learn more.
2. Devote 60% to your expenses. The 60% Solution is a budget strategy that entails fitting your expenses into 60% of your gross income so that you can dedicate the remaining 40% to retirement, debt repayment, short-term and long-term savings, and fun or entertainment expenses.
3. Devote 10% to your retirement. Put 10% of your gross income toward your retirement, such as in a 401(k) investment plan. Refrain from touching this money for any purpose unless the circumstances are dire.
4. Devote 10% to debt repayment and longer-term savings. Invest in an index fund or stocks if these are your investment vehicles of choice. Otherwise, put the money away in a savings account and touch it only to repay debt or in financial emergencies. Want to learn more? Check out Crashproof Prosperity newsletter for investment advice.
5. Devote 10% to your short-term savings. This money is for periodic expenses like medical expenses, auto maintenance and repairs, appliances, birthday gifts, Christmas gifts, and home maintenance costs. Spend this money when you need it, because that is precisely what you’re saving it for.
6. Devote 10% to your “fun money.” You can spend this money in any manner that pleases you. This is guilt-free money that you can spend on movies, entertainment, eating out, a manicure, junk food or anything else that you wish.
7. Reduce the number of categories you use. Many budget software programs instruct you to use a million different categories or subcategories. If you want to simplify your budget, use as few as you can. Rather than having a category for every entry, combine some expenses into a larger category to keep it simple. Looking for ways to cut money out of your budget? Check out my budget tips here.
8. Pay your bills online. Automate your bill payments as much as possible so that you don’t have to remember to pay your bills every month or buy stamps. Consider automatic bank withdrawals and pay bills online through automatic debit whenever you can.
9. Automate your savings. Every time your paycheck is deposited into your account, have a transaction scheduled that will transfer a specific amount into your savings from your checking. Aim to find a high-yield savings account for this purpose.
10. Keep your fun money in cash form. Take out your 10%, keep it in cash, and use it as you see fit. Watching the cash disappear from your wallet can actually teach you a lot about where the money goes.
If you investigate, you’ll find numerous techniques to simplify your budget. Do what works well for you! Avoid struggling with a new budget plan because you think it must be better. If it isn’t actually helping you budget, then it’s not the “better” option for your needs. Sometimes simpler is more effective.
Want more help? Take a look at this credit card guide to help you with the month to month “stuff”. I also updated my education page, so take a look at that too for more information.