Only 32 percent of U.S households prepare a monthly budget.
I know you are thinking, So what is the point? What does this have to do with budgeting tools? see, not having a budget often means many people do not know where their money is going.
56% of people in the U.S do not have $1,000 in their savings.
See, only having $1,000 in savings is not a problem if you are just starting in the workforce, but it sucks if you are near retirement age.
Now, don’t you see where the problem comes into play?
No budget + No Planning = No retirement
Not having retirement savings means working longer than the retirement age of 67. Now, who wants to do that? Budgeting can help you retire early by using whatever excess money into investing in index funds or real estate.
Budgeting can be daunting, stressful, embarrassing, and downright hard. With everybody trying to take a piece of your cash, I put together a list of budgeting tools that can help you for FREE!
I have used a couple of these to help pay off over $11k in debt this year.
Let’s Get it Started!!
Summary
Pen and Paper
Everybody has pen and paper, which leaves you with. . .
No Excuses
No Fancy Formulas
No Reason Why You Can’t Budget.
Using pen and paper allows you to get to the bare basics, especially for those who are not technology savvy.
Granted, with pen and paper, you must manually go through your financial statements to make sure you use this budgeting tool effectively.
It allows for mistakes, tedious, but it may be just what you need to get started and on track.
A study showed that most people prefer to budget with pen and paper.
There is a 12% increase in people budgeting more than in 2019, and most of those people prefer pen and paper over digital apps.
You can also transfer what you have to your notepad on your phone. That way, you can always see where you are budget-wise. You won’t have an excuse since you put the budget into your phone, and your phone is always with you.
The only problem with this way is that mistakes can be more frequent, especially if you have multiple banks and accounts that you have to look through.
Spreadsheet
We have established that budgeting can be a drag and most people like to spend until they have no more money left and are back in the same boat as last month.
We can take this budgeting thing a few steps further from pen and paper, which is good in case you have sloppy handwriting. It also helps if you are a little more knowledgeable about computers, formulas, etc.
Spreadsheets are more modern and more digital.
It’s easier to keep up with, especially if you use notion, a great note-taking app. You can access it from your phone or desktop, and notion also has spreadsheet templates.
If you have apple product(s), you can start your budget on one note and finish it or look through it on another app such as your mac or iPad.
There are a few downsides, as I mentioned above.
You still have to manually put your categories in the spreadsheet even if you decide to use templates. Most likely, you will not have every category you need, and you still have to make sure you stick to it and go through the process of going through your statements.
Spreadsheets are better than pen and paper because you can neatly see where you have been spending money.
Hopefully, seeing that you will decide to change your life for the better, it did for me when I noticed I was spending $1500 a month on fast food over a few months, which was a gut punch.
Seeing enormous spending will make you want to get back on track and not spend so much in that area.
Budgeting Apps
Now for those who are immersed in technology and have a tight handle on it. Then this will be for you.
Budgeting tools are straightforward for you to use.
Just attach your bank, loans, and credit card information. Then the app will sort it for you, at the very least, calculate your total spending.
Budgeting apps may also put all of your transactions into a particular category for that month. Of course, there are a few apps that are not free.
These are the two that are free and the ones that I use the most:
Mint
Mint has a rating in Forbes as the best budgeting app and is worth strong consideration regarding budgeting.
You will have to create your monthly budget.
After creating your budget, if you have a high amount of spending for a particular category, then Mint will notify you.
The main thing with Mint is that it is made for you to budget; plus, it is free and easy. On top of that, you can download the app on your phone or tablet or log in through your desktop, which gives you no excuse as to why you can’t keep up with your finances.
So for beginners, this is best for you; you have no idea what a budget is, and you don’t know what you spend each month.
Mint thrives on that and helps you to focus on saving and paying off debt.
Personal Capital
Personal Capital is free and mainly used for net worth tracking and retirement planning. It also tracks your spending and puts it in categories like Mint.
As you can see, it is highly similar to Mint, but why should you use both?
Personal Capital focuses on net worth and retirement planning. As you pay down your debt and save/invest more, you can watch your net worth grow.
What is net worth?
The short answer is Assets – Liabilities = Net worth.
(Assets) $100,000 – (Liabilities) $75,000 = $25,000
$25k is your net worth in this scenario. The more liabilities you pay off, your net worth will be higher.
Why is net worth Important?
Net worth is significant because the closer to whatever net worth you want, the closer to retirement you will be. Allowing you to stop working and do what you want in life.
You could continue working if you genuinely enjoy what you are doing. But knowing you can leave any day and not be stressed about money is truly freeing.
Even though personal capital is not as strong as Mint regarding budgeting, it will show you how your money is growing and what investments you have. While also showing you how much you are spending each month as well.
Which is the whole point, right? Taking the money you use to pay off the debt to invest is a faster way to grow your net worth than strictly saving.
Especially if you don’t want to work until age 67.
Using both tools to track your spending and investments will make you debt-free and build wealth!
Conclusion
No matter what you use:
- Pen and Paper
- Spreadsheet
- Digital Tools
- Mint
- Personal Capital
You must budget and find the holes in your finances so you can use that money and invest. So you can potentially retire before 67.
Just find which one is right for you and get to work, because it is essential to budget no matter how much money you make. You do not want that money to slip through your hands, and you are in your golden years, having to work because you could not save and invest earlier in life.
If these tips and apps helped you, please comment below and let me know.
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