Whether you're a first-time renter or you've been renting for years, creating a monthly budget can be an invaluable tool. A monthly budget will help you avoid over-spending while keeping you on track with bills and other expenses. Budgets are a great way to achieve financial goals or simply for keeping your income and spending under control. Here are some valuable tips and tools that can help new and experienced budgeters alike.
A crucial first step in creating a monthly budget is to figure out your net income and then make a list of all monthly payments and necessary expenses. Your net income is not what you earn, it is the amount of money you deposit into your account after taxes and other deductions have come out. This is the actual amount of money you can use for paying rent, bills, and living expenses. From there, make a comprehensive list of fixed payments such as rent, utilities, car payments, credit card payments, and car insurance. These are payments you absolutely have to make. Then you will need to figure out how much you can spend on living expenses such as groceries, gas, and miscellaneous things like gym memberships or activities.
Creating a monthly budget can be a daunting task. Many don’t know where to go from the first step or how to efficiently manage it. Thankfully, there are a wide variety of tools and resources at your disposal to keep you on track. You may prefer the old-fashioned way of using a notebook or an envelope system with designated cash in each individual envelope for every expense. In this day and age, there are a large number of (free or inexpensive) online software or smartphone apps that provide you with easy alternatives.
Mint is a popular and secure online budgeting tool and app owned by Intuit that helps you to create budgets and then automatically tracks your money. After entering some initial information and linking your account information, Mint creates a customized budget that incorporates your income and expenses and then continues to track your money. You can see where your money is going and receives alerts for any unusual account activity. It even gives you tips on how to better manage and save money.
If you are uncomfortable with the idea of linking your bank and other account’s information, you may consider BudgetPulse. BudgetPulse provides you with a free online budgeting program that helps you visually organize and manage your finances without linking private account information. With BudgetPulse, you can still track your money, get help in creating a budget, and even set saving goals.
An often-overlooked aspect of a monthly budget is to set aside money for savings or investments. Saving money for emergencies or for a future financial goal is an important category in the budget. Making it a priority will help you to follow through and avoid spending the money that should be going into savings.
For those who want to take budgeting for the future to the next level, investments are a great way to make your money work for you. Investing, however, can be a scary thing that many are unsure of. If you’re not ready to take a big financial leap into the investment world, try out the Acorns app and take a small painless step. Acorns links to your debit card and rounds up your purchases to the next dollar. It then takes that spare change and places it in an investment account. Once you’ve accumulated $5.00 in spare change, the app will automatically invest it. Investments are generated and then recommended after gathering information about yourself that helps the app determine what type of investor you are. According to its founder, Acorns allows you to invest with a small decision, not a really big one.