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4 Signs You Need A Budget to Manage Your Money

Money management is not easy. But if you see yourself struggling to pay your bills on time or always in debt, this could be a sign that you need a budget to manage your money.

A budget helps you figure out if you are spending more or less; it allows you to make real changes for example cutting back on your spending; and it allows you to save up for things like buying a house or for investing.

If you feel like you need help with your money, then you need the best budget app to track your personal finances.

Related:

5 Signs That You Need A Budget to Manage Your Money

Sign # 1: You Need A Budget If You Always Run Out of Money

You need a budget if at the end of the month, you have no money left in the bank account. That could be a sign that you’re living paycheck to paycheck. That also could be a sign that you’re spending too much on things you don’t want or you’re spending on things you can’t afford.

If that is the case, then use a money management app to stay on top of your spending.

Sign # 2: You Don’t Have Any Savings

If you don’t have any savings, this could mean that you rely on credit cards to purchase things or you spend your money as soon as you get it. Or it could mean that you’re living paycheck to paycheck.

Nonetheless, you need a budget to help you save your money. 


Take control of your money by tracking your personal finances with free tools like Personal Capital


Sign # 3: You’re putting off Paying Off Debt

If you have a lot of debts and you’re struggling to paying them off, that could be a sign that you need a budget. A budget can help you work out which debts to pay off first and which ones to pay off later.

Paying off your credit card debts, loans will free you from debt worries. You will pay less in interests and fees and can start saving for things like a holiday or car.

Sign # 4: You Need a Budget If You Have No Savings for Retirement

Managing your money is not all about tracking your spending, but it is also about planning for the future.

According to a 2018 survey done by GoBankingRates, nearly half of Americans have $10,000 or less in their retirement savings and will likely retire broke.

So the sooner you start savings for retirement, the better your financial position will be. A budget app can help you create a plan to reach your retirement saving goals. 

If you’re already have a retirement account such as 401k plan, then congratulations. If not, reach out to your employer to see if they have one and contribute to it. If your doesn’t have a 401k plan, consider setting up a Roth IRA.

These are some of the signs that can indicate that you need a budget. But you might be wondering what is the best budget app to track and monitor your personal finances?

Use the Best Budget App to Track Your Finances

It’s very easy  learn how to create a budget in excel. But that can take too much of your time.

Nowadays, and thanks to technology, there are a lot of free personal budget apps available to help you create a budget. One of the best personal finance app out there is Personal Capital.

The Personal Capital app is an easy and convenient way to track and monitor your finances. Plus, it’s free, and is accessible online, Iphone and Android. The budget app shows your net worth, assists you in managing and helps you plan retirement.

The dashboard gives you an overview of your financial life. Users like how the app gives an overall look at their accounts, including retirement accounts, and mortgages.

How to Create a Budget 

If you’re old school and like learn how to create a budget with a pencil and paper, here are some easy ways to create a budget to track your personal finances.

1. First, Figure Out How Much Money You Earn Each Month

You need to have an idea of how much money is coming in every month. So gather all of sources of income, i.e., your salary from full-time or part-time job and any other income, for example, money from investments, government benefits, etc…

2. Next, Figure Out How Much Money is Going Out

You need to gather all of your bills, for example you credit card statements, rent or home loan, car or public transport, phone, and electricity. Doing so helps you figure out where your money is going.

3. Third, Divide Your Monthly Expenses Into Three Categories: Fixed, Variable, and Voluntary.

Fixed expenses are expenses that stay the same every month, for example, your rent, car payment and maintenance, mortgage, insurance, property taxes, etc.

Variable expenses are expenses that are subject to change from month to month, such as groceries, credit cards, transportation, utilities, etc.

The last category I’d call voluntary expenses. These include things such as entertainment, shopping, vacations, Christmas presents—things that you could do without.

If your total income exceeds your expenses, you’re off to a great start! Then the difference should go on savings. However, if your expenses exceed your income, then you will need to cut back on a few things like alcohol, cigarettes, buying clothes, eating out, etc.

Things to Do if Your Expenses Exceed Your Income:

a. Eliminate or Cut Back On Your Expenses

Fixed expenses may be a little bit harder to eliminate or reduce, but the first place to look at is your voluntary expenses. See if you can reduce or eliminate unnecessary things on that list. Ask yourself questions like, do I really need to take four or five vacations a year?

Do I need Cable when I am barely home? If you don’t want to get rid of these things, shop around for a better deal. For example, switch to a different, much cheaper cable services.

Next, look at your variable costs. See, for example, how many times a week you eat out and do it less often. A good way to cut on food expenses is to prepare and bring your own lunch to work.

Brew your coffee in the morning. A cup of coffee at Starbucks may seem nothing, but buying one every day adds up. Reduce your utility bills by shutting off lights and electrical appliances like TV, phone, laptops, and microwave when you leave the house.

Doing these things can significantly lower your expenses.

b. Review and Update your Budget Regularly

Review and update your budget regularly, maybe every 2 to 5 months, to make sure it reflects your income, expenses, and what you want to accomplish. But the most important of all is to stick to it.

If you haven’t created a budget already, you should do so now.

Tip: If you need a budget, then I suggest that you check out Personal Capital. Personal capital is like Mint.com. It’s a great tool to track all of your finances in one place. It allows you to connect all of your financial accounts including your mortgage account, your bank accounts, your investment accounts, your credit card accounts, your retirement accounts, etc. The good thing is, it’s totally FREE.

Click here to sign up for Personal Capital

Related:

Work with the Right Financial Advisor

You can talk to a financial advisor who can review your finances and help you save 100k (whether you need it to pay off debt, to invest, to buy a house, or plan for retirement, saving, etc). Find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

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