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Seven budgeting secrets everyone should know

Note: This post was written by Jennifer Sanchez, Marketing & Communications Intern for Money Management International. In her spare time, Jennifer enjoys brushing up on her budgeting skills and watching The Bachelorette — sometimes simultaneously.

I don’t have a diverse stock portfolio (or any portfolio, for that matter!). I drive a 10-year-old car. And I pay cash for most of my big expenses. In the world of personal finance, I’m just a 20-something who’s barely getting by.

So what sets me apart from the people who can give you “99 frugal tips to make 99 lunches for less than 99 cents!” or tell you “How I went from $2 dollars to $2 million in 2 days”? I know what it’s like to live paycheck-to-paycheck while juggling expenses – and I make it work.

So what’s the super top-secret key to successful (or, at the very least, sufficient) money management? Keep it simple. Forget all of the complicated stuff and go back to the basics.

The following is a step-by-step look at my personal budgeting practices. While there’s no one-size-fits-all approach to organizing and managing money, you may find that you can implement some of my tactics into your own routine.

  1. Create your own personalized budget. Begin by literally writing down every bill and expense you have. This step is necessary when creating a personal budget. Use this document as a template and personalize it to your life and expenses. This way you can make changes to your budget quickly and easily. For each paycheck, I create a budget and save it to my computer. I email a copy to myself so I can easily reference my budget and make sure I am on track.
  2. Keep track of the expenses you have coming up for each paycheck. On my phone, I use the “Notes” app and have a note for each paycheck. I list all of my bills and fixed expenses for that paycheck, and if I remember an upcoming expense, I can just grab my phone and type it in.
  3. If you get paid every two weeks, why not create a budget every two weeks? For me, it’s a lot easier than creating a monthly budget. Things change throughout the month and it makes the budgeting process simpler. Whenever I get paid, I open up my awesome personalized budget, grab my note with all my upcoming expenses, and fill in the blanks to create my budget.
  4. Make sure every dollar has its place. If your paycheck is $500, make sure you’re only budgeting for $500. I start by allocating money toward my upcoming bills (fixed expenses), then I set aside an amount for savings (even if I can only afford $20), then fixed expenses, and even give myself a set allowance for entertainment. If there something left that I can’t budget for, I put it off until my next paycheck. I only use my credit card when I have to, and I keep it under a small balance.
  5. Plan for periodic expenses. I recently was invited to a wedding, and knew I needed to buy a new dress and a gift for the happy couple. I gave myself a budget, and saw that I had about three paychecks before the big day. I divided up the allotted amount by three and put that amount of money aside from each paycheck. You can use the same principle for any other event or situation that you need to save for — back-to-school expenses, birthday celebrations, holidays, etc.
  6. Know what you owe. If you have credit card debt or any student loans, it helps me to keep track of the balances. I keep all of my debt balances in an Excel spreadsheet, and any time I make a payment I subtract that amount. It’s encouraging to see that amount get smaller each paycheck! If this is an area you struggle with, MMI has free resources and services that will encourage you and empower your financial life.
  7. Use your checkbook! Every time I make a purchase with my debit card, I record the transaction in my register. It helps me to feel on top of things when I know exactly how much is in my checking account at all times. It also makes balancing your checkbook each month easier (Yeah, you should be doing that too!)

What do you think? Can you apply any of these tips? What is your personal budgeting style?

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