Using a budget planner can seem like one of those tasks that just a bit too much work. You know how much money comes in each month and you know – roughly – how much goes out for bills, rent and other bits and pieces, why would you need to write that down somewhere?
It’s a good question.
Some people don’t like using a budget planner because they already do everything in their head – and if it’s working for them, why change it? However, if you often find yourself getting to the end of the month and dipping your toe into your overdraft or borrowing money, then it might be a good idea to start using a budget planner.
Not only does a budget planner help you to realise where you’re spending too much money (or places you could trim spending), it fosters a careful attitude toward money. We can all be guilty of going on a bit of a splurge after payday (when it always feels like you’re never going to run out of money) and then feeling a little light come the 27th and 28th of the month – a budget planner helps you see the long and short-term effects of those little splurges. (And helps you decide whether you can afford them.)
The benefits of using a budget planner
- Security: using a budget planner helps you see when you have money coming in and when you have money going out. By knowing when your phone bill, rent and other costs are due to come out, you can make sure that there’s money in the bank to pay them and avoid late fees or overdraft charges.
- Preparation: Using a budget planner can help you be prepared for big events in several ways. Not only can you start to prepare and save for big events – like weddings or holidays – months in advance, but you can also use the budget planner to tuck money away every month for a rainy-day fund.
- Saving: If you’re looking to save – perhaps for that holiday you’ve always wanted, your wedding or a mortgage deposit – then using a budget planner to keep track of your spending and saving is essential. (Plus, it makes the whole thing far less stressful – you can see how much you’re going to save each month, rather than hoping you’ll have some of your wages left to put away.)
How to use a budget planner
There are two ways you can use a budget planner, really: the old-fashioned way or the modern way.
Both are perfectly decent ways of doing it, and it all comes down to personal preference. (And how good you are with numbers.)
The old-fashioned way requires downloading a budget template (a little like this one from Microsoft) and going through all of your bank statements, bills and paperwork to get an overview of your finances and make informed decisions about how to proceed (and where you can nip and tuck).
The modern way is a little easier: use an app.
Budgeting apps let you see at a glance when money is coming in and going out. They also present graphs and analysis on where you’re spending money to give you an idea of where you can cut down. Plus, you can just log-in and check it any time you like, and they only take a few minutes to set up – they pull all of the information from your bank account, rather than forcing you to shuffle through files and loose bits of paper.
That said, there’s a certain finality to writing down your budget that you don’t get from an app – it feels like you’ve made a resolution that you’re going to stick to, rather than just downloading a quick and app that you can just as easily delete.
Just go with whatever works for you. If you’re glued to your smartphone, go with an app. If you want a sense of finality (or just are a bit old-fashioned), go with pen and paper. Just make sure you’re honest with yourself, set realistic goals and stick to your budget and you’ll be well on your way to savings in no time.
If you’d like to find out more about personal finance apps and how they can help you save and budget, check out these top money management apps.