I’ve talked about starting a budget before, but few budgets are ironclad – especially from day one. Usually, when you’re first starting a budget, you need to take time to tweak the exact amount you’re spending on certain expenses as well as add in any expenses you may have left out. If you have a zero-based budget, you may need even more tweaking. Either way, there is usually something missing from your budgeting practices when you first begin.
Fortunately for you, I’ve been there before. I had little guidance, created a budget on my own, and fixed it as I went. So, in this article I put together a list of 20 major budgeting hacks that can make your life much easier. Without further ado, let’s dive into the budgeting hacks!
1. Automate, Automate, Automate
You need to choose how much you can invest on a regular basis. These routine investments should be an amount that won’t break your bank, but it should be one that really helps you towards a financially secure future. Once you’ve decided on that amount, you should choose a brokerage and set up automatic deposits. The frequency is up to you. A lot of people do it on payday, to immediately take the money out so they don’t spend it, or just once a month.
If possible, you should invest even more than what you do automatically. If you get a bonus, make more money, are able to save more, or end up with more money for any reason, just use it to get ahead with your investments! Invest as much as you can and your future self will thank you immensely.
M1 Finance is my personal favorite brokerage, but Fidelity and Vanguard are also great!
2. Focus On High-Interest Debt
I don’t think I need to explain how freeing it can be to pay off all of your debt. If you have a lot of debt now, be sure to focus on paying it off. With that being said, not all debt is a priority. Lower interest debt, like a mortgage, might not need to be paid off ahead of time. However, debt from things like credit cards have atrociously high interest rates. The interest rates are so high that if you don’t make it your priority to pay it off you may be paying it for many years to come.
If you have always had issues getting started with paying off debt, try the debt snowball method. It’s popular because it almost has a built in reward system. You end up seeing results faster than a lot of other debt payment strategies, so it’s easier to stay encouraged and keep hacking away at your debt.
3. Invest Spare Change
For new or low-income investors, I think Acorns is one of the best options on the market. Acorns offers a service that makes it easier than ever to start saving and investing. These days there really are few excuses for not getting your finances in order – you don’t need to be a finance “whiz” to get the ball rolling. Unfortunately, most people still don’t have enough saved up for an emergency!
If any of this resonates with you, I think Acorns could be helpful. However, if you’re at the stage where you routinely save and invest already, and you are exploring new investment options, I’m not sure Acorns would be a good choice for your current situation. The seeds being planted here grow more into good habits rather than the ideal investment portfolio or amount (although it is a great start).
If you’re interested, go to their site and check them out. Right now they are running a promotion where you get $10 when you make your first investment!
4. Refinance
When interest rates go down, look into refinancing major sources of debt like your house. It may be surprising to learn, but it can save you hundreds or more monthly!
5. Cut Your Car Insurance Payments
Car insurance is not something to skip or the time to opt for the cheap option. It is better for it to be a little expensive than for you to not have it if an accident does occur and you desperately need it. If you ever get into an accident that is your fault, car insurance can save you from potential financial ruin.
Liability coverage is for injury as well as property damage. Good coverage on it can save you from nasty lawsuits. To be clear, liability coverage is for someone’s expenses if you’re found to be at fault in an accident – almost every state requires it to some degree. Make sure this covers enough in an absolute worst case scenario. For the other parts of your policy, you’ll need to determine what you actually need in your specific case. For example, do you want to cover rentals or towing? Do you need collision coverage (in other words, is your car worth more or less than the deductible would be anyway)?
Again, car insurance is definitely worth making sure you’re covered well, even if it costs a little bit more. Shop around with various agencies, but don’t settle or cut corners. Fortunately, there are deals around and ways to cut your car insurance premiums into more manageable amounts.
6. Focus On The Big Three
It’s crucial to make sure you cut expenses if you need to. A lot of people can cut a significant part of their budget by focusing on the following expenses:
- Housing
- Transportation
- Eating out and groceries
If your rent or mortgage costs too much, downsize. If you’re spending too much on your car, just buy a reliable used car. Buying new cars or leasing is a fast way to jeopardize your financial security. Alternatively, if you eat out too much, try to reel that back in.
7. Use Spreadsheets
Below you can see a picture of my free budget template! It has everything you need in order to get started. All you have to decide is how much you want to allocate to different categories each month. Of course, I highly recommend you use it, but you should also tweak it to perfectly meet your needs. To get a free copy, sign up for my newsletter and we’ll send out the budget template and a financial goals worksheet in the welcome email!
8. Leverage Credit Cards
Credit cards are more useful than most people give them credit for. If it’s stolen, it reduces your liability for the expenditures the thief puts on the card. Beyond that, it’s also a great way to give your credit score a nice boost as long as you follow healthy spending habits and pay it off each month.
9. Do Monthly Check-Ins
Set aside one day, at the beginning or end of each month, to take care of your finances. That’s really all it takes to keep everything in order. Also, use the day to pay bills and do general financial management like tweaking your budget. With personal finance it’s important to keep it as simple and easy as possible. The simpler your finances, the easier it will be to manage it, stay consistent, and reach all of your goals.
10. Routinely Revise Discretionary Spending
I don’t recommend revising every part of your budget, but regularly monitor your discretionary or “fun” spending. If it becomes a cause of concern – then start lowering it. Never let it get out of hand.
11. Monitor Utility Costs
Keep an eye on all of your utility bills. Make sure you aren’t overcharged or doublecharge. It happens, so it’s important to stay vigilant. Beyond that, keep an eye on fluctuations in bills like your energy costs can let you know if something is broken or needs attention.
12. Do Your Groceries In Bulk When Possible
Buying in bulk is a great what to save money at the grocery store. It’s usually cheaper per unit or item. Obviously, if you need a lot of something, bulk buying wins the day. However, the price difference could be as small as a few cents per unit or item, or as much as several dollars per unit or item. Whether or not that is a major difference likely depends on the specific product and its availability near you.
You’re prepared for the mini doomsdays. If you buy a lot of your products in bulk, when people are rushing out to stores during hurricane season or because of some other natural disaster, you won’t have to worry about competing for a limited supply. Buying in bulk makes it easier to prepare for the worst occasions and alleviates at least some of the headache that comes with it.
You’ll have to go to the store less frequently, and you’ll be far less likely to shop impulsively. Buying in bulk makes it easy to schedule regular excursions to the store, instead of having to go at random days when you realize you’re out of one or two specific items. The less you go to the store, the less tempted to buy things you’ll be. Additionally, it saves on gas, and if you buy from bulk-only stores (like Costco) it will be much harder to find cheap individual items to buy (so you’re less likely to buy things you don’t need).
Meal planning and preparation is made even easier by shopping in bulk. If you like to plan your meals a week or more in advance, buying some of your groceries in bulk can require less running back and forth to stores from week to week. On top of that, it can be easier to use bulk orders before expiration dates if you make plans for what you’ll use it for ahead of time.
13. Use Lists When Shopping
When you go grocery shopping, stick to your defined, detailed list. Just the act of creating a list makes it easier to enter the store, focus on what you want, and exit without overspending.
14. Plan For Unexpected Expenses
Now, if we could expect the unexpected it wouldn’t be called that, would it? You can’t plan for everything, but do your best to prepare for emergencies. Emergency funds are a good way to stay financially secure. On top of that, do your best to notice issues that might spiral out of control and turn into bigger problems. In other words, stay vigilant and keep an eye out for any red flags in your personal finances. The sooner you notice them and take care of them, the smaller of an issue they become.
15. Use A Zero-Based Budget
One system I’m a fan of is zero-based budgeting. I wrote an article on it here. With it you’re basically making sure that every single dollar you make has a specific function. That helps give a much more detailed focus on what you’re using all of your money for. All of your money will be assigned to mandatory expenses, discretionary spending, savings, investments, and debt repayment. In short, your income minus your expenses (including investments) should always be zero. If that sounds complicated or daunting, then zero-based budgeting may not be for you. If you like the sound of an even more structured approach to budgeting, I’d give it a try.
16. Plan For Medical Expenses
This is overlooked all the time in budgets. Include your routine copays, deductibles, and medication in your budget. You clearly can’t budget for a medical condition you’re not aware of yet, but you can include expenses in your budget for your routine examinations and procedures – anything you know you’ll have to pay at some point in the near(ish) future.
For example, include allergy medication in your budget if you have seasonal allergies. Also, if you plan on having a baby, start saving up or budgeting for the bills that will come from that! For most people, medicine and routine visits shouldn’t be a huge part of your budget, but it’s still important to include it.
Conclusion
Creating a budget from scratch can be a bit difficult, and it’s common to encounter a learning curve and some growing pains. Use these budgeting hacks, if you haven’t already, and you’ll be better off for it. Over time you’ll eventually have a pretty ironclad budget. If you think I forgot something, or want to share your own budgeting hack, leave a comment below!
