We often hear that the only way to become financially stable is to be budgeting. But how exactly do you start? Let me break down how I did it!
1. Define Your Budgeting Goals
To successfully budget, you first need to create a goal, so you can define what success means to you! Perhaps you want to budget in order to save up for a certain purchase. Or you simply want to keep track of your spending to ensure you’re spending it on the right things. Whatever your goal is, choose one to set up your mindset.
For me, it was prioritizing saving and to stop spending money on purchases I felt that weren’t worth it. In the past, I only thought about saving as an after-thought. I used to take what was left over for that month and move it into savings, instead of prioritizing that a certain amount gets transferred into my savings account each month. In addition, I wanted to shift my thinking to how my purchases would be used long-term.
2. Choose A Budgeting Style
Automated Budgeting Apps
Some of the apps that were first recommended to me when I started budgeting were these, like Mint. These apps gain access to your bank and credit card so they’re are able to automatically track your spending and categorize each expense. To me, these are great apps to easily understand your spending habits and to create your monthly budget from there. No need to manually input each of your expenses if you’re forgetful!
After using these apps for a little bit, you can create your budget for each category of expenses. The app will then track your expenses against your budget and inform you if you go over budget. This makes it really easy to see how you’re doing. You can see if you might want to adjust your budget (if you see a frequent category going over budget) or need to decrease your spending. Mint also gives alerts about any reoccurring bills that you had to pay. In addition, it gives you alerts if there are any suspicious large transactions on your accounts which can be helpful!
For me, I stopped using these types of apps because some of my transactions required manual input or editing, which decreased the convenience. I would have to manually input cash transactions and adjust purchases that were split amongst friends. Also, I was a bit weary of giving another app access to my financial accounts, but maybe I’m just a bit paranoid!
The Verdict:
Overall, these apps would be good if you want to take more of a hands-off approach to budgeting and want the app to do all the work. If you have pretty straightforward transactions that won’t require much (or any) manual editing or input, this would work for you!
Photo from YNAB Twitter 
Photo from Investor Junkie
Zero-Based Budgeting
This method of budgeting is more of a style, rather than a type of app. With zero-based budgeting, you budget your monthly income into separate categories so that all of your income is accounted for, leaving you with your expenses matching your income. This can be done through different apps like You Need A Budget and Every Dollar. There are also apps that connect to your financial accounts or you can input your transactions manually. I liked using zero-based budgeting because it made me more thoughtful about budgeting. This method made me prioritize saving more because I used to just budget for my expenses, and then transfer whatever was leftover to my savings. When I used the zero-based budgeting method, I actually budgeted a monthly savings amount.
I found that with zero-based budgeting, it was difficult to account for every dollar. I tended to create a “Miscellaneous” category just because I didn’t feel like I could budget for everything. This kind of defeated the purpose of zero-based budgeting for me. I’d rather have more general budget amounts than to feel the need to put every dollar into a category.
The Verdict:
I think this budgeting method would work well for you if you like to know where every dollar is going and would like to prioritize savings! If you have more impulsive spending habits, this budgeting method may be able to help you visualize where every dollar will be going each month.
Envelope System Budgeting
This method is a bit old-school and requires you to take your monthly income in cash and separate it into different envelopes for each category. Then when you need to purchase something, you use the cash that’s in the envelope!
For some, this method makes it easier to feel the effects of budgeting. Each time you make a purchase, you have to physically reach into the category’s envelope and take out the cash. This might make you more mindful about your purchases because you see the cash leaving your envelopes. Using this method would also limit impulse purchases since you might not always have the right amount of cash on you to make that purchase.
The biggest con for me was the fact that I make most of my purchases with a credit or debit card. So, this method would require me to make constant runs to the ATM to withdraw cash to create these envelopes.
The Verdict:
This method would work well if you mostly use cash for your purchases and would like to be more mindful with your budgeting. However, there are a lot of limiting factors to this method, unless you digitize it.
I ended up choosing a mix between zero-based budgeting and the envelope system. My mixed method uses an app called ‘Buddy’ where I can set my budget for different categories each month. But it doesn’t require me to use up my whole income so if I end up having a bit more income than expenses left over, that’s fine. This allows me to be more flexible with my budget, but still mindful of how much I have in each category. I check the app most times before I make a purchase so I know if I’m spending within my budget. This gives me the same mindfulness as the envelope system, but the convenience of using my credit card for purchases.
3. Give it a try and adjust!
I think this is starting to become a typical ‘last step’ in a lot of my how-to blog posts! Once you’ve set your goals and chosen your budgeting style, it’s time to test it out and see if it works for you. As always, if it doesn’t make adjustments as necessary. Hope this helps you to start budgeting and let me know how what your goals and methods you used in the comments, Instagram DMs or through email!
