Tired of reaching the end of the month, wondering where in the world all your money went?
Have some big financial goals you're trying to reach — buy or refinance a house, pay off the car, get rid of debt, save for a vacation, help your kids pay for college?
What about just creating a more mindful, thoughtful daily routine with your money — so you can splurge on small things without guilt, while also meeting your goals and monthly budget?
Yep, time to keep track of your money. Time to start a budget, babe!
And no, it’s probably not as bad as you think. Tracking your spending and planning your spending may sound like a nightmare, but I promise you’ll love the results.
Here’s how to get started budgeting your money:
1. Track how much money you spend for a few months.
The first step to creating a budget that works is figuring out where all your money has been going each month. To do this, you’ll want to break out your last few months of bank statements and credit card bills.
Devote a few hours to adding up all your spending in categories like food, entertainment, transportation, clothing, and regular bills on a per-month basis for the last few months. If it’s currently August, for example, figure out exactly how much you spend on food and dining out in June and July. And do the same thing when it comes to what you spent in other categories that tend to hit your budget hard.
Tally those numbers up to get an idea of how much you’re spending each month! You’ll need this information once you get to the point where you’re creating your budget for future months. There are tools you could use to help you:
You Need A Budget, aka YNAB, is an award-winning app/software that makes budgets, paying off debt and reaching goals easy. Claims to save users an average of $600 per month, or $6,000 per year, and a 34-day free trial, YNAB is a leader among budgeting apps.
- BBB A+ Rating
- Highly secure site and app
- 34-day free trial
- 100+ free video lessons on personal finance
- Add your spouse, partner, kids or other to budget together
Here’s what YNAB does:
Price: $11.99/mo or $84/year.
Tiller review: Google Sheets budget spreadsheet
Tiller: This budgeting spreadsheet app promises to help you manage your monthly cash flow while sticking to a preset spending plan — all within a spreadsheet from Excel or Google.
With Tiller, you can monitor your spending all in one place, work up a realistic monthly budget, and track your net worth.
After the 30-day free trial, Tiller costs $5 per month.
2. Figure out exactly how much money you earn
Next up, figure out exactly how much money you bring home each month. This should be easy if you earn a salary but may prove more difficult if you’re paid hourly or rely on a lot of overtime. Income includes:
- Side gigs
- Child support
- Benefits like housing allowance or food stamps
If you can’t figure out exactly how much you earn, try to come up with a minimum amount of money you earn in any given month. If you sometimes have 5 weekly paychecks in a month but usually just 4, for example, create your budget based on four pay periods. Or, if you sometimes earn extra commissions but not always, plan your budget based on your lowest income months. If you happen to earn more in any given month, you can treat it as “extra” money and allocate it toward debt repayment or savings this month or next.
3. Figure out exactly how much money you owe
I suggest using a nice third-party app like Mint or YNAB that will pull in all your accounts, including credit cards, saving and checking accounts, car notes, student loans, mortgages and even personal loans into one place.
Be honest with yourself and add ALL your accounts! No cheating! These apps will give you a snapshot of what is coming in, what is going out and the real figure of your DEBT.
4. Cut spending
Now that you know how much you earn (or approximately how much you earn) and how much you’re spending each month, it’s crucial to look for areas to cut. Maybe you found out you’re spending $500 or more on dining out each month and know you could easily cut that in half with a little meal planning. Or perhaps tracking your spending helped you realize you’re spending way too much on clothes for the kids or yourself.
Bill negotiation services are a quick, free way to identify and cancel recurring subscriptions you no long need or want, and lower your monthly utility bills. For example, Truebill will negotiate better deals for more than two dozen kinds of services, including Amazon, Netflix, Hulu, Time Warner cable, Audible, Spotify, gym memberships, insurance policies and internet. Truebill saved me $16 off my AT&T bill and got me a better plan, to boot. The app also saved me $23.20 per month on my TimeWarner/Spectrum Internet plan.
To deepen any savings found via Truebill, see if you can slash your basic expenses like insurance.
Compare rates among different lenders for auto insurance, homeowner’s insurance, and other insurance products you buy. I recommend Insurify, which lets you compare prices for more than 40 carriers:
- Insurify customers save an average of $489 a year on their car insurance.
- For auto, home, life, or renters insurance.
- Compare 10+ quotes from national and regional insurance companies in 2 minutes.
- Buy your policy online or over the phone in 5 minutes.
- Insurify’s CEO and founder Snejina Zacharia started the business in 2013 by way of a pitch competition at MIT — one of the few female founders in the fintech space.
5. Allocate all the money you earn on paper at the beginning of the month
At this point, you should be fully aware of your income, your spending weaknesses, and how your current spending might be impeding your ability to save. With those details in mind, it’s time to sit down and create a monthly budget for the following month.
If you want to create your budget on paper, the process is fairly simple. All you have to do is create two different columns — one for each bill or estimated expense and another for how much it costs. At the top of the page, also list your monthly take-home pay so you can reference it when you need to.
Start at the top of the page by listing all your regular recurring bills you have to pay — bills like your rent or mortgage, utilities, car payments, and insurance. (Later on we’ll talk about ways you can reduce the amounts of those recurring bills, with help from apps like Truebill.)
Then, create a list of estimated expenses you’ll need to cover for the month — for example, how much you plan to spend on food and dining out, gas to get to work, and entertainment for the month.
Keep an ongoing tally of how much these add up to, then see what’s left. At this point, you’ll want to allocate any additional funds to savings, investments, and debt repayment.
If you’re unsure how much money to save, that’s totally normal. Keep in mind that, if you have high-interest credit card debt, you’ll want to allocate as much of your income as you can toward debt while also saving for the future. Considering the average credit card interest rate is well over 17%, any credit card debt you have should probably be tackled first.
First, see if you qualify for a 0% balance transfer credit card — which could save you thousands of dollars in interest and help you pay off debt much faster.
Here’s how a monthly zero-sum budget might look for someone that brings home a total of $7,000 per month after taxes and 401(k) contributions:
Monthly Income: $7,000
|Groceries and dining out||$700 (estimated)|
|Utility bills (electric, gas, and water bill)||$400 (estimated)|
|Credit Card #1||$400|
|Credit Card #2||$250|
|Credit Card #3||$1,000|
|Total budget amount||$7,000|
6. On paper, pay all your bills and expenses until your income is gone.
Keep in mind that the example budget above is just that — an example. Your budget may look totally different depending on how much you earn, how many kids you have, and other variables.
The key is making sure you list all your bills and fluctuating expenses along with savings and investments each month. Spend every dollar you earn “on paper.”
As the month goes on and you get paid, pay bills and expenses according to your budget and check each of them off as you go. When it comes to estimated expenses like food and transportation, you’ll need to track those categories throughout the month to ensure you’re staying on track with your spending goals.
At the end of the month, you’ll see how you did, and have the opportunity to tweak your monthly budget so it works a little better the following month.
Remember: This is an art and a science, and no one is perfect. Bills fluctuate, expenses come up unexpectedly, and income can go up and down. Be kind to yourself, but also realize that the stricter you are with your budget, the more joy and freedom it will ultimately afford you.
7. Paying yourself first
“Pay yourself first” means that you prioritize your financial security and long-term goals before your whims and short-term goals.
I elaborate on the basics of investing for women in this post, including retirement, 401k, Roth and Traditional IRAs, gold investing and having a basic savings account for unforeseen expenses. It is also important to model good financial habits and basic investing for your kids — you can learn and reach goals together.
But the importance of paying yourself first, prioritizing your financial wellbeing above new clothes, a home reno or fancy car, is really about establishing good habits and a foundation of security from which you can build any life you can dream of.
The bottom line
Here are my top 3 budgeting tips for moms:
1. Top budgeting tip for single moms: Track your spending
If you’re tired of wondering where your money goes every month, the time to give budgeting a try is now. Maybe a budget is exactly what you need to start paying down debt and reaching your financial goals. Try a free trial of Tiller or YNAB to get started now.
2. Budgeting tip: Consolidate your debt
Whether it means refinancing your student loans, paying off or transferring your cards into a 0% credit card, refinancing your home to pay off debt, or otherwise managing your balances and interest rates to streamline what you owe, making it simple often also saves you money.
3. Budgeting tip: Have a goal
Humans are more productive when we are working towards something. Instead of just focusing on a zero debt balance — which is a wonderful goal — focus on the next step. What does that achievement get you? Does it mean you can qualify to buy a home? Help pay for your child's college? Go on a much needed vacation?
Or, maybe now that you have extra cashflow, it is time to save for and invest in retirement?