Are you one of the 59% of Americans who doesn’t follow a budget? Does even the word budget make you shudder? Even as someone who actually enjoys budgeting, I admit the process is usually portrayed as time-consuming, meticulous, and spreadsheet-oriented … which doesn’t exactly sound like a good time.
That’s why I’d like to introduce you to the budgeting system I have used for nearly ten years. It’s realistic, fairly simple, and designed to help you reach your goals. It’s all online, so you can access it anytime, and there are no extraordinary (or even basic) math or Excel skills required. Best of all, it’s a great way to become more aware of your own money habits, so your hard-earned paycheck can go towards the things that matter most to you.
Sounds too good to be true? Let me show you how it works:
Choose an App You Trust: When I was in graduate school, my financial coach turned me on to Mint (I promise this is not a sponsored post, I just really love Mint). This is the first and only budgeting system I’ve ever used. I really appreciate Mint because it’s free and easy to use. I like that I can go into detail on the website but also quickly check in on the go using the app. Mint is owned by Intuit, the same company that developed TurboTax and Quickbooks. Since I use TurboTax to file my taxes, I have already trusted Intuit with very sensitive personal information.
Tip: Not feeling Mint? No worries. There are a lot of great budgeting apps out there. Don’t be afraid to try out a few to find the one that’s right for you.Connect Your Accounts to the App: Mint allows me to bring all of my accounts (checking, savings, high-interest savings, credit cards, student loans, and even investments) into one place. All you have to do is connect your specific accounts to the app using your username and password. This allows Mint to continuously pull in data from those specific accounts to keep everything up to date.
Tip: Not quite ready to commit? Start by connecting your most used accounts. For us, that’s our bank account and credit cards. You can add the others over time.Review Your Transactions: Each week, set aside 10-15 minutes to review what you’ve spent. Mint will try to categorize your expenses for you (such as “utility,” “auto loan,” or “charitable donation”). Look through the transactions and make sure that everything is categorized as you want them to be. Over time, as the system learns more about your spending patterns, you’ll be able to reduce this review time to just a few minutes a month.
Tip: No matter what budgeting system you use, the categorizing of expenses is often the most tedious part. Make these 10-15 minutes something to look forward to by saving a new podcast episode or your favorite beverage just for this occasion. Set aside the time on your calendar so you don’t forget.Create an Actual (not Aspirational) Budget: Most first-time budgeters fall into the trap of thinking, “I’m only going to spend money on necessities and put the rest away for savings.” But a budget that doesn’t reflect your spending patterns isn’t likely to stick. Besides, cutting out all the things you love is only going to make you resentful and frustrated. The great news is Mint will build a budget for you based on your real transactions. You can make adjustments as needed.
Tip: Be sure your budget also reflects your values and goals. Take a few moments to envision what you want to achieve financially — like repaying debt, taking your dream vacation, starting your own business, or buying a home. Then, look over each part of your budget as well as your individual transactions. Is there any fat that you can trim? Any items you’d feel ok foregoing in light of your big goals? If so, choose a 1-2 things to reduce or eliminate. If that feels good, maybe add a few more next month. Start small and continue reshaping your budget over time as you learn more about your money habits.Stay in the Green: Mint makes it easy to quickly get a gut check on how you’re doing with your budget over the course of the month. By looking at the “budget” tab, I can see whether I’m in the green (under budget), yellow (right on target), or red (over budget) for each category as well as for my overall income/expenses that month. When money was tight in grad school, I used to pay close attention to these indicator lights near the end of each month and modulate my spending so I could make it to the finish line in the yellow or green in each category. Mint will also send you an email if you spend more than normal in a specific category, so you know when you need to exercise restraint.
Tip: Don’t sweat it if you go over in a few categories. That happens. That’s why I always suggest leaving a buffer in your budget of $50-100 each month so you can take care of unexpected expenses and opportunities that arise without feeling like you’re going to catapult yourself into credit card debt.Don’t Just “Set It and Forget It:” Your budget will change as your life changes, and that’s a good thing. My husband and I quickly check in with our budget each month during our money date. Once a year we take a deeper dive as we reevaluate our goals for the next year. It’s ok to let things shift as long as these changes are guided by your important goals and values.
Tip: If you haven’t already, set aside a day and time to go on a money date with your partner so you can connect on your budget. While one of you may be the primary person following Mint, you should each have access to the account. Check in on a monthly basis so you are both aware of where your money is going.
What budgeting system do you use? Let me know below!