Simplify Your Budget

Finances have a knack for becoming complicated. Therefore, making your budget as simple as possible will allow you to get a better handle on your finances so that you can focus on matters that are more important. Simplifying your budget can have positive effects on all aspects of your finances by helping you keep everything under control.

Stressing out over your finances is a waste of your time, so rein them in today with a simpler, easier to manage budget.

Follow these strategies to make your budget easy, workable, and effective:

1.     Start with a simple spreadsheet. Keeping things in a spreadsheet can simplify your budget significantly. Set it up however you like or download a free template for Excel or Google Docs; just choose something that works for you.

2.     Devote 60% to your expenses. The 60% Solution is a budget strategy that entails fitting your expenses into 60% of your gross income so that you can dedicate the remaining 40% to retirement, debt repayment, short-term and long-term savings, and fun or entertainment expenses.

3.     Devote 10% to your retirement. Put 10% of your gross income toward your retirement, such as in a 401(k)-investment plan. Refrain from touching this money for any purpose unless the circumstances are dire.

4.     Devote 10% to debt repayment and longer-term savings. Invest in an index fund or stocks if these are your investment vehicles of choice. Otherwise, put the money away in a savings account and touch it only to repay debt or in financial emergencies.

5.     Devote 10% to your short-term savings. This money is for periodic expenses like medical expenses, auto maintenance and repairs, appliances, birthday gifts, Christmas gifts, and home maintenance costs. Spend this money when you need it, because that is precisely what you're saving it for.

6.     Devote 10% to your "fun money." You can spend this money in any manner that pleases you. This is guilt-free money that you can spend on movies, entertainment, eating out, comic books, junk food or anything else that you wish.

7.     Reduce the number of categories you use. Many budget software programs instruct you to use a million different categories or subcategories. If you want to simplify your budget, use as few as you can. Rather than having a category for every entry, combine some expenses into a larger category to keep it simple.

8.     Pay your bills online. Automate your bill payments as much as possible so that you don't have to remember to pay your bills every month or buy stamps. Consider automatic bank withdrawals and pay bills online through automatic debit whenever you can.

9.     Automate your savings. Every time your paycheck is deposited into your account, have a transaction scheduled that will transfer a specific amount into your savings from your checking. Aim to find a high-yield savings account for this purpose.

10. Keep your fun money in cash form. Take out your 10%, keep it in cash, and use it as you see fit. Watching the cash disappear from your wallet can teach you a lot about where the money goes.

If you investigate, you'll find numerous techniques to simplify your budget. Do what works well for you and your family. Avoid struggling with a new budget plan because you think it must be better. If it isn't helping you budget, then it's not the "better" option for your needs. Sometimes simpler is more effective.