Budgeting Tips

1. Don't be too hard on yourself

If you’re just starting out with budgeting, be patient and don’t be too hard on yourself if you don’t get it exact right. Budgeting is not an exact science and it takes time to get in tune with your finances and to develop a good understanding of your regular expenditure.

Sometimes it takes a few months or even a full year of budgeting before you get a good understanding of which times of the year require more attention than others.

For example, when bi-monthly and quarterly utility payments fall in the same month, September always seems to be a big month for birthday presents (hint: its 9 months after Christmas!!)or when and how much to factor for your tax return.

Be patience and look on the positive side. Instead of thinking that you didn’t save as much as you thought you would because you didn’t get the budget 100% right, think about the fact that you’re taking the steps to take control of your finances and bit by bit you’ll get there.

You should be proud of the fact that you're actually taking the time to complete a budget, be positive!

2. Know your budgeting level

When it comes to budgeting, there are different levels. It’s important that you understand and that you are comfortable with the budgeting level that is right for you. If you try and budget at a level that doesn’t work for you, you won’t be as effective as you could be or worse still, you’ll give up on budgeting because you’re not getting the desired results and it’s all too hard.

Whether you look on the internet for a budget planner or some form of budgeting tool or you use something that you have developed yourself, you need to make sure the product fits. That’s why I created the EasyBudgeting’s Personal Budget Planner, because I had friends and acquaintances complaining that they were struggling with their budgeting and they wanted something that was simple, straightforward and easy to use. They didn’t want some that required hours of effort each month, they didn’t want to record every dollar they spent, they just wanted something that they could use regularly to budget their income and expenses and see whether they were on track or not.

EasyBudgeting’s Personal Budget Planner, has been designed to help everyday people with their budgeting. This budgeting tool has been created for people who don’t know where to start and don’t have the knowledge base or ability to create their own budget planner.

The model has been created in Excel using intelligent formulas and handy drop down menus. Effectively, a user can set their budget by simply selecting the start month of the income or expense, select the frequency of the income or expense and input the corresponding amount. After those three steps have been completed, the data populates automatically – no need for time consuming manipulation of data.

After the completing your budget for income and expenses the user is presented with monthly view of income and expenses, a 12 months summary indicating net savings or losses for the month and the full 12 months and easy to read savings and expenses graphs.

EasyBudgeting’s Personal Budget Planner, provides people with a tool to set a budget and identify where they are over spending and where they need to cut back. Used regularly, this is a great tool for people who struggle with budgeting and need an aid to get them to start budgeting without making it overwhelming or stressful.

Now, if you’re an individual who already has a pretty good idea about budgeting but wants a budgeting tool that will help them budget to the nth degree, then you will need something which meets your needs. You’ve moved on from the beginning budgeting stage and you may want something that goes to the next level.

Some people want to record every single purchase so they can record their spending and see how it tracks in line with their budget. Some people want something in between a beginner budget planner and track every dollar budget planner.

The point is you need to find the budget planner that best works for you.

For instance, if you’re someone who struggles with budgeting and don’t really know where to start, chances are buying a budgeting tool with all the bells and whistles, requiring daily input of spending and regular maintenance may be a waste of money. You’re entering the budgeting world at the wrong level…..you need to walk before you can run.

I believe it’s very difficult to go from beginner budgeting to expert budgeting and if you do attempt to make the leap, chances are you may be put off the whole process and you may ending up wasting time doing it incorrect or half hearted or you may think it’s too hard and you just give up altogether. Either way, you wasted your time, effort and money and you’ll be deterred from trying to budget in the future because it was just all too hard.

I know a lot of people find budgeting stressful and overwhelming and most the time people may not like what they see when they actually sit down and estimate their spending over a 12 months period.

The trick is to find a budgeting tool that best works for you.

3. Be conservative

When you’re completing your budget, be conservative.

What do I mean by this?

If you’re doing your expense budget and you’re not sure exactly how much you’ll spend or incur, budget on the high side. For example, if you think you spend around $50 per month of electricity but you're not sure, budget for $60 or $65 until you get a good feel for the regular amount. It’s better to be $10 to $15 better of than over spending on a regular basis.

When it comes to income, it’s a lot easier because there’s generally only limited sources of income and you probably have a good handle on how much you earn. Having said that, if you work shift or sometimes work overtime, your main source of income could fluctuate.

If you’re doing your income budget and you’re not sure exactly how much you’ll earn, budget on the low side. For example, if you earn around $500 per week plus a fluctuating overtime amount, estimate the overtime amount based on say 60% - 75% of what you think you average in terms of overtime pay.

Remember, when it comes to expenses include a little extra and when it comes to income take off a little. That way, you should always be ahead of the game

4. Understand your partner

When you're single, you spend your money and budget your way. You don't really need to consider how you spending impacts on your husband/wife/children etc, it only you that really counts.

Once you enter into a serious relationship, chances are you will be required to consider how your spending habits and budgeting techniques impact on the "other half". There may be the possibility that your habits are completely opposite to that of your partner and a compromise is required.

For example, if one person in the relationship is a conservative spender/budgeter and the other is more willing to spend now think later and may not be interested in the idea of budgeting, chances are difficulties may arise when it comes to managing the finances as a couple. It is important to understand the habits of the other person and decide on a "middle ground".

I know a couple where the wife does all the budgeting and the husband has a more relaxed attitude towards spending and doesn't really contribute to the budget process. In this situation, the wife has budgeted a weekly allowance (after taking into account required expenses and a level of savings) for each of them and they can spend that money on whatever they want in whatever way they please.

This "agreement" gives the husband the ability to spend without being concerned that he's breaking the budget and the wife is happy because his spending habits are controlled and within their budget.

Another example is a husband that is more conservative than his wife when it comes to budgeting and an acceptable level of savings. They've worked to accept each other's approach to budgeting and savings and have learnt to give and take as required to ensure both their needs are satisfied.

It takes time, understanding and compromise to ensure both people in relationship are happy with the joint approach adopted. Bear in mind, if you give in too much to your partner’s habits, you run the risk of being unsatisfied, frustrated or resentful towards your partner because of their spending/budget habits. This will only lead to arguments about finances that could be avoided if more time was spent communicating and understanding each other spending/budgeting habits and/or requirements.

The best approach is to clearly communicate and ensure there is equal compromise from both sides and a clear "middle ground" is established.