Easy Digital Budgeting
When you’re living paycheck-to-paycheck, money is flying out the window, and bills and stress are piling up, it’s time to get on a budget.
If you have a lot of transactions going on every month and like everything handy on your computer or phone, digital budgeting will be your jam. Everything you need can be found online and you can pull it up on the go!
This is a digital budgeting method that you can use whether you use cash or cards to pay for your purchases. This is how I do my budget every month and I will teach you how to do it for yourself too.
Creating A Zero-Based Budget
You are going to be creating a zero-based budget. A zero-based budget means that you make a plan for every single dollar that you earn, down to the penny, before the month starts. Zero dollars will be left unbudgeted! Typically, you might plan out all your expenses and then have some money leftover. Don’t leave that money unbudgeted. Plan for it to go to savings or toward your debt, and then you’ll have a zero-based budget. Any outgoing money is considered an expense, even extra debt payments or savings.
To summarize: Income - Expenses = $0
Materials You Will Need
Master Budget Spreadsheet. This is your main document where you balance your budget and show “budgeted” vs “actual” costs. Create your own, or, I’ve done the work to make a pretty one you can use! Download it below.
Spending Tracker App. This is how you track every single purchase. Example: if you spent $149.50 on eating out, your Master Budget will reflect that. Then your spending tracker will show each individual restaurant you went to and how much you spent at each one. I highly recommend one that connects to your bank account so you don’t have to hand enter each transaction (I use Every Dollar Plus. Mint is a good free option). If you don’t want to use an app, you can write down all your spending on your Master Budget Spreadsheet or even on a piece of paper.
Other items needed: online bank accounts, pen and paper for taking notes and doing math, calculator
Setting Up Your Budget
Tip: Pull up your Master Budget Spreadsheet or watch my brief tutorial video below before you read these instructions. It will make a lot more sense if you can visualize what I’m talking about.
- BUDGET EACH PAYCHECK OUT INDIVIDUALLY. This is the best way to budget because you will be determining what every dollar from each paycheck is actually and literally going to be paying for. It is so much easier to keep track of your dollars when you think of it this way! Follow these steps for each paycheck.
- INCOME. Using your Master Budget Spreadsheet, write down your expected income under the “income” section.
- CATEGORIES. Moving down to the expenses section, write down all the categories you typically spend money in. Be specific here. Vague categories make your spending harder to track. See below for a sample with all my budget categories.
- EXPENSES. Now that you have categories, list out the amount you expect to spend in each category in the “budgeted” column. Include all your bills. Keep reading for how to determine how much to budget in each category.
- If you are using a spending tracker app, make sure it has the same budget as the Master Budget Spreadsheet.
Common Budget Categories
Mobile Phone Bill
Write in a category for anything unique to the month, e.g. Mother’s Day, car registration, back to school supplies
How Much to Budget in Each Category
Look up or print our your last 3 months worth of bank statements. Go through every single transaction and determine which category each transaction falls into. Then, add up the total of each category and divide it by three to get the average spent in each category over the last three months.
Next, determine where you need to cut back. If you are struggling to make ends meet or spending more than you make every month, look at the categories you feel are the least essential and where your spending is the least controlled. Typically, you’ll be able to make big cuts in your restaurant, personal spending, groceries, entertainment, and miscellaneous categories. Try cutting back at least 10% in each one and setting that as your new budget. Don’t be afraid to cut back more if you know you’re spending way too much.
Now you have a budget set up with all the categories you’ll need, and you’ve made a plan to cut back a bit going forward! Great job.
Balancing the Budget Weekly
Once you get paid and begin to spend money, use a spending tracker app (or something similar) to keep track of each purchase and bill. About once a week, pull up all your materials and start filling out the Master Budget Spreadsheet’s “spent” column with how much you’ve spent up until that point. Your spending tracker app will itemize each purchase you’ve made in each category. Your Master Budget Spreadsheet will only show the totals.
Now you can see how much of your money you’ve spent! Do this regularly and especially before you get paid to make sure you’re on track. Any unspent money at the end of a pay period should be sent toward a goal like debt payoff or savings. Only let it roll over to the next pay period if you know you’re going to need it for an upcoming expense.
And, that’s it! If this seems like a lot at first, you aren’t alone. Budgeting takes a little practice to figure out. Watch the tutorial below for a better visual on what to do. Do you still have questions about getting a budget started? Please reach out to me!