January is a fantastic time to create or update your budget. Start the New Year with fresh goals and plans. Budgets layout the foundation for saving and spending and they are a great way to help keep a family’s finances in check. Here we will discuss some budgeting tips on how to make a great budget.
Disclaimer: I am not a financial planner or expert. All information in the post is my opinion and should not be used as financial advice. This is based solely on my experiences. Any action you take based on the recommendations from this blog is at your discretion.
Minda’s 5 Personal Budgeting Tips
1. We don’t track our spending …
If you create a great budget and implement ways to adhere to one, I believe you don’t need to track your spending. For a period of time, I tracked our family’s spending using a spreadsheet. I found this process to be cumbersome, time-consuming and not very useful. I realized that by setting up money systems, our spending generally aligns with our budget plan and I spend very little time managing our money. How do we do this?
One of the most important (and easiest) ways to achieve this to automate your money. Our budget directs where our money is siphoned off to. After payday, money is automatically diverted into our savings accounts for our emergency and retirement funds. After the initial set up, money is being saved without having to lift a finger. Bills and other expenses are set up to be automatically paid as well.
In regards to daily spending, we know from our budget how much we can spend for groceries, entertainment, eating out and also for personal spending. If we happen to overspend in a certain category, I will “borrow” money from another category to pay for it. It’s like a feedback system – it reinforces us to be careful to watch our spending for the next month.
Side note, if you are still keen on tracking your spending – I think free programs such as Mint or YNAB are good options. But I wouldn’t pay money for a program to track spending.
2. Miscellaneous fund
In our budget, we have included a “miscellaneous” fund for unexpected expenses that crop up over the month. It prevents our budget from being too rigid and gives us some room for extra expenses.
3. Updating the budget
Budgets are not meant to be rigid or fixed. In fact, you should be updating it whenever there is a change.
For example in Canada, when January comes around – there is reduced income from paycheques as more money is taken off for CPP/EI. The budget needs to be updated to accommodate the lower income. Then when July rolls around less money is deducted for the CPP/EI. And so the budget needs to be changed to reflect the higher income.
Or let’s say you want to take your family on a grand vacation next year. You would need to change your budget to allocate more money towards the vacation fund.
4. Giving every dollar a job
For every dollar in our savings account, I assign it a “job”. I know what each dollar saved is for. I believe this process goes hand-in-hand with budgeting. After the money is siphoned into the savings account, I update our spreadsheet that lists all of our savings funds. Take a look at this post on how to do it:
5. Communicate with your partner
One of the best ways to adhere to a budget is to make sure that you are on the same page with your partner. Money is a very important yet tough topic to talk about! Create/update a budget together and agree on money goals. A budget is ineffective if only one person adheres to the budget. Open communication and honesty on finances are so important to make the money flow well and be managed properly.
Budgeting Tips and Resources
Using a spreadsheet
I personally use spreadsheets to manage our finances. I love to customize what I need and for the fact, I can access the spreadsheets on my phone. In order to use a spreadsheet efficiently, here are 4 spreadsheet functions/formulas that are essential to know:
Budgeting related posts
Budgeting 101 – gives an overview of the importance of a budget and describes 4 different methods on how to create one.
How to Financially Prepare for a Baby – There are 3 different stages to financially prepare for a baby: before conception, pregnancy stage and when the baby arrives. Budgeting is the one consistent thing you need across all three stages. At every stage, you will need to revise your budget to reflect the current stage.
How to Budget for Kids’ School Expenses – We all know how raising kids can be costly. Many of the expenses in raising kids are tied to their education. To help our kids succeed academically we need to, as parents, ensure that our finances are in order. Budgeting for these school expenses can help us provide for our kids.
15 Easy Ways to Stay on Track with your Grocery Budget – Groceries often make up a large part of a family’s monthly expenses. Keeping within a set grocery budget will help you keep your expenses down.
Budget Planning – Money for the Mamas – One of my favourite mama bloggers has this amazing 5 part series on creating a budget. It’s easy to read and understand. It’s so worth checking out!
I hope I have inspired you and given you some budgeting tips and tools on creating your own “Ultimate Budget”! Good luck and best wishes for an amazing year!
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As always thorough post! I always enjoy reading your financial tips. Thanks for sharing.
Thank you April!
Communicate about the budget with your partner has been something a lot of people struggled with but it’s so important to talk about finances openly
It’s often one hard subject to discuss with a partner! But once both partners are on the same page – managing finances are so much easier. Thanks for stopping by.
Communication with your partner is often the biggest struggle in budgeting. Having a plan that you both agree on is so key to making a budget work. Great article and thanks for the simple tips.
I agree 100% Thanks for stopping by 🙂
I am so grateful for this post. I needed all these tips which I will follow in order to achieve my goals for the new year.
Good luck with your new year’s money goals!
Love all of these tips! I feel like this is the year that I need to get my personal finances in order. I do so much traveling, so it’s even more important.
Good luck Lily! I love your travel blog! Looking forward to seeing where you go this year.
I totally agree on giving every dollar a job! I put my money to work FOR ME! Funny enough it never talks back like when I give my hubs a job to do! 🤣
Hey! My money doesn’t talk back either – I love it!
I love it! I’m 100% with you on not having to track your spending ALL. THE. TIME. It’s gets to be cumbersome and overwhelming! Besides, the harder something is to do, the more likely you are to quit. We use a lot of credit cards and bank accounts to separate our spending – a lot in the same way you do though – so has and groceries are on one card, recurring bills on another, etc. Every dollar spent has a place it belongs and a purpose. I think by doing things this way, it’s easy and streamlined. Thanks for… Read more »
You are so right! We tend to quit tasks when it’s too hard and if it takes too long. Just need to set up systems, let it roll and check in once in a while. We have much more important things to do in life than a constant watch of our money. Thanks for stopping by Ana!
Thanks so much for sharing! These are great tips and I look forward to implementing some of them in the new year.
You are welcome Dewanna! Good luck and happy new year!