Creating a budget and sticking to it are some of the first steps towards financial freedom. It is easy to get overwhelmed by the idea of creating and maintaining a detailed budget. The good news is that budgeting doesn’t have to be complicated. There are plenty of free or inexpensive resources available to get you on a budget. Her are 8 easy ways to set up a budget.
1. A Notebook & Pen
This should probably be your first move. You cannot fill out a budget online or with an application with a bunch of guesses. Perhaps you could, but it would not be very effective or accurate. After a month of tracking all your expenses you will have a better idea of where your money is going. This will help you estimate expenses into your “official” budget. You can read further about getting on a written budget here.
2. Cash Envelopes
The cash envelope system is the method Dave Ramsey promotes. Once you have figured out your budget categories and target amounts with your written budget, you label envelopes for each expense category and fill them up with the appropriate amount of cash. There is real pain associated with spending cash. The idea here is you are getting away from swiping the debit or credit card. It is particularly beneficial to use envelopes in categories such as groceries, eating out, and entertainment.
3. A Spreadsheet
This is obviously free if you already have Microsoft Excel on your computer. Don’t have Microsoft Excel? Download and install the freeware version called Open Office. I have both and they’re very similar. Google Sheets is also a good alternative for online collaboration. Maintaining a spreadsheet budget will take more work than some of the options listed below. However, I’ve found that the extra effort helps me have a better understanding of my money. You can download a great budgeting spreadsheet featured above here from Vertex 42. If you’d like to have all of Dave Ramsey’s forms in an excel spreadsheet download them here.
It is a toss up between Mint and YNAB as the most well-known budgeting application. Setup is relatively easy as users insert their banking, credit, and investment accounts. Mint takes it from there and begins tracking your money. There are default expense categories but you can easily add your own customized ones as well. The goal setting tools are user friendly and the trends pie charts I’ve found very useful. The Mint blog articles are also very useful. Since Mint is owned by Intuit your data conveniently feeds right into Turbo Tax during tax season. Mint is free, can be used as an application, or from the website on your computer. You can watch a tutorial on Mint’s budgeting feature here.
You Need a Budget, besides Mint, is probably one of the most popular budgeting tools on the Web. With YNAB you also get access to financial literacy classes, tutorials, a community of users, budgeting tricks, and a whole lot more. The app itself is available for Windows and OS X. The mobile version is also available for Android and iOS. You can also view your financial information offline if needed. YNAB imports transactions from your credit cards, banks, retirement funds, and other accounts. The app helps you in setting financial goals and sticking to them. It also helps you reconcile accounts when your numbers seem off. The budgeting features help you stop living paycheck to paycheck and set savings goals. I really enjoy reading the YNAB blog articles as well. You can try YNAB free for 34 days. After that, YNAB currently costs $60 as a one-time purchase and allows you to use the application on all your devices. You can watch a comprehensive YNAB tutorial here.
6. Every Dollar
This is Dave Ramsey’s newest budgeting tool. Sign up is easy and the mobile application is free. There’s a link to the 7 baby steps. There’s an explanation of the debt snowball concept and the use of the debt snowball tool with this application. There is an upgrade option where you can connect your bank and credit cards to your account for free with a 14-day trial. After that it’s about $100 a year. You can watch a tutorial on EveryDollar here.
7. Level Money
Think the envelope system on your smartphone. After you set your savings and spending goals the app breaks down what you can spend on a daily, weekly, and monthly basis. Level Money connects to your bank accounts and estimates your income. It also estimates your spending habits automatically. A quick glance at your screen during the day will give you an idea of what you can spend and stay on track. Level Money is free.
What began as an alternative, cool Excel spreadsheet has become a Web application. The setup is very simple. There’s several common expense categories to choose from during the initial setup and adjust later as you see fit. Income and expenses are entered manually. There are some nice planning and goal-setting tools. This app comes with a free 30-day trial and costs $4.95 a month if you continue the service.
See also: 11 Expenses Destroying Your Budget