Mint.com](https://mint.com) is a personal financial program that focuses on budgeting and tracking expenses. Once you signup and link your financial accounts over their secure service, it downloads and syncs your transaction data as well as intelligently auto-categorizing them. You can create and manage financial goals as well as setup alerts. I started using mint around the time I started college, and it was fundamental to building positive and intelligent personal finance habits and still is an important tool to me today.
“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time.” Johann Wolfgang von Goethe
By having a budget and actively maintaining it, you can more actuarially determine how much money you are spending and on what.
With your budget in place, you can plan around how much money you have or that you're earning to spend within your means.
Set savings goals to have an emergency fund to be used only for big unexpected expenses or if you lose your main source of income for a period. An Emergency Fund should be able to cover three to six months worth of your monthly costs.
A budget can help you plan and stick to your financial goals by keeping your spending habits focused and purposeful.
If you have debt or need to take on debt, a budget will help you manage your debt from getting out of control as well as helping you calculate how much you need to save to pay off your debts promptly without paying too much interest costs.
Through monitoring your transactions, you can observe your spending patterns and find any wasteful spending. With that information, you can construct a better budget to help you save more.
The more money you save, the more money you have to potentially invest. It takes money, to make money.
Yes, there can be a time upfront cost in setting up a budget, but after your plan and or system is in place, it takes very little effort to maintain and update your budget. Reviewing it is also made simple but graphs and other reports to help you spot trends and other problem areas very quickly.
Having a small amount of money means you're more vulnerable to financial shocks from sudden high costs. You may also have bad spending habits that are keeping you more cash drained that you need to be, and a budget would help you spot that.
If you have some money, you may find yourself in a situation where your expenses start to rise the more money you make and then you'll find yourself in the situation where you have very little money.
By not knowing, you give up control of your money and then the flow of money starts controlling you. Reality hits hard sooner or later, the quicker you address your personal financial problems, the less painful it will be.
“If money management isn't something you enjoy, consider my perspective. I look at managing my money as if it were a part-time job. The time you spend monitoring your finances will pay off. You can make real money by cutting expenses and earning more interest on savings and investments. I'd challenge you to find a part-time job where you could potentially earn as much money for just an hour or two of your time.” Laura D. Adams, Money Girl's Smart Moves to Deal with Your Debt
Here are some budgeting categories to organize your expenses:
Auto & Transport Auto & Transport: Public Transportation Bills & Utilities Bills & Utilities: Subscriptions Education: Student Loans Entertainment Food & Dining Food & Dining: Fast Food Food & Dining: Groceries Food & Dining: Restaurants Food & Dining: Vitamins/Supplements Health & Fitness: Gym Home: Home Supplies Home: Mortage & Rent Personal Care Shopping Shopping: Books Shopping: Clothing Shopping: Electronics & Software Travel
In your category budget, you can choose to rollover and leftover amount of overspend into the next month. I select this option for most of my categories. The few that I don't are for costs that don't change much, like Rent or Gym memberships.
In the transactions view, you can re-categories certain transactions and split single transactions into multiple spending categories. I use this a lot for ATM withdrawals or Amazon Purchases.
For educational purposes, I've shared my personal Budget and Expenses. [ .
<span style="font-size: 24px;">Monthly Income: $2,026.54</span> Rent: $1,000 Bills & Utilities: $155
Phone: $60 Groceries: $150
Fast Food: $125
Restaurants: $100 Public transportation: $116.50 Entertainment: $60 Personal Care: $50 Total Expenses: $1941.50 Net Income (Earnings minus expenses): $85.04 Expense Ratios Rent is 27%of Annual Gross Income which is close to the 30% Baseline for having an affordable Home/Rental
Rent is 49% of Monthly Income (after taxes) Food is 17% of Monthly Income (after taxes) Bills are 10% of Monthly Income (after taxes) Transportation is 5% of Monthly Income (after taxes) Rent and food are usually the two costliest categories in a budget. > Expenses Without Rent (Living at Home) Paying of Loans at $500 per month Alternative Total Expenses: $1441.50 Net Income: $584.50
<span style="font-size: 24px;">Monthly Income: 3,547.10</span> Rent: $1,600 Bills & Utilities: $200
Phone: $80 Groceries: $225
Fast Food: $175
Restaurants: $150 Public transportation: $116.50
Taxi: $100 Entertainment: $125 Personal Care: $100 Total Expenses: $2871.50 Net Income (Earnings minus expenses): $675.60 Expense Ratios Rent is 22%of Annual Gross Income which is a bit below the 30% Baseline for having an affordable Home/Rental
Rent is 45% of Monthly Income (after taxes) Food is 15.5% of Monthly Income (after taxes) Bills are 7% of Monthly Income (after taxes) Transportation is 6% of Monthly Income (after taxes)
After Food spending, Subscription spending is an area that I am closely monitoring. With many Internet companies switching to subscription-based models, all those $10 - $20+ subscription costs add up. For me, that came up to almost $1,300 annually and around $110 per month. I will be doing some serious prioritization on the subscriptions I use and try to take advantage of annual subscriptions to save on costs for my most used services that provide that kind of plan.
A credit card can be a very useful tool for budgeting. First off, don't think of having a credit card as an extension of your income, think of it as insurance on the cash you already have. A credit card should protect the cash you freely have access to. So if your budget is 2,000 and you have a credit limit of 4,000, you should only spend up to 2,000 on credit as a way to ensure you can always have access to quick cash if you need it. Only go over your budgeted amount in emergencies or special circumstances. If you have a sudden expense, and you have spent primarily on credit, you can defer your credit payments while you still have your cash as the fallback. If you spend with cash and have limited access to more credit, you will be in a more costly situation. Spending primarily on credit while spending within your budget limit with a card that has favorable rewards programs is almost like free money.
Money should be mastered, not served. Syrus, Maxims
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