When it takes a lot of time to manage your expenses (also referred to as living on a budget), it becomes easy to keepputting it off (meaning it doesn’t get the proper attention it needs). Reviewing your expenses helps identify if you are staying within your budget or if certain adjustments need to be made that will prove to be more beneficial for you to make progress and achieve your goals.
What can you do to avoid this problem? The answer is to make this process as timeless and easy as possible! The more mediums such as multiple credit cards, multiple debit cards, and cash complicates the process.
The key is to KEEP IT SIMPLE. There is not a one-size-fits-all solution to the problem (what works for one person does not necessary work for someone else), but we are going to discuss three possibilities below.
Approach #1: Cash Only Budget
Yes, I know we are in the 21st century, but there are still some people that prefer to use cash only. Till Debt Do Us Part actually suggests using a cash-only budget approach for the couples that she works with on the show.
It’s easy to keep spending with a debit or credit card without evening realizing how much you have spent. With cash, it’s very tangible and visual, once it’s gone, it’s gone. This approach is as simple as placing your cash allocated for each expense category in the designated, labeled envelope or jar and taking it out when you need it.
Approach #2: Plastic Only Budget
Personally, this is the approach I use, but it may not be a good solution for everyone, depending on his/her spending habits. I use one credit card to pay for all of my monthly expenses such as gas and food. I pay all my bills with this card unless they don’t accept credit cards.
For these companies, I use billpay (not automated) as this is a free service from my bank with online banking. I make sure to pay my credit card off once a month not to incur any interest expense and I use a card with cash back rewards to make extra income.
Keeping my bills low makes this method easy for me to use. I don’t recommend this method for anyone that likes to use credit cards as extra money and doesn’t have complete control over his/her spending habits.
Approach #3: Use Mint
Mint is an excellent, free online software program that helps with managing your money. It allows you to link all your accounts into one place making it easier to manage. Also, it even allows you to create a budget and track it.
I like to use mint to review all my transactions on a regular basis, making sure that I personally made all the stated purchases (and not someone else as identity theft is unfortunately a common practice these days).
These are only three different ways to manage your money. The important factor is to keep it simple and do what works for you. For example, I use Approach #2, but I also use a portion of Approach #3 (mint) as an added tool.
How do you manage your money? How do you keep it simple?