Yes, we all hate the word “budget,” but one thing many people don’t realize is that the word budget can mean a lot of different things.
It doesn’t necessarily mean that you have to set strict limits for yourself on all your favorite things (dining out, shopping, coffee, etc.) and then track them closely each month, writing down every penny you spend, to make sure you don’t exceed those limits.
There are tons of ways to develop and follow a budget ranging from low maintenance “set it and forget it” to the more extreme example above. The most important thing is finding a system that works for you!
First – why set up a budget?
Building a budget helps put things in perspective. We all have goals for things we want to accomplish with our money. However, we don’t all have a plan to achieve those goals or a way to make sure we can even accomplish them. A budget is a great starting point for building a plan.
Second – should you set one up?
The short answer is: Yes. Regardless of where you are in life, if you have some income and some expenses, it never hurts to make sure you are fully aware of how much your income and expenses are.
Third – what are some ways you can do this?
Step 1: Write down your monthly net income and regular monthly expenses to see how much is left over each month. Sometimes this is the only step you need to follow, and it will tell you enough of what you need to know.
Step 2: Figure out what you need to do based on Step 1.
If your monthly expenses exceed your income or are equal to your income, then the first thing you need to focus on is how to fix this so that you have some wiggle room and money to dedicate toward savings each month.
If your monthly expenses are less than your income, then you are off to a good start. Now you just need to figure out how you can maximize the amount that is left over each month and where that money should go.
Step 3: Find a system that works.
This step is a little more complicated, but below are examples of a few ways you can budget.
Set limits to your credit card spending. Look over your budget worksheet and mark off which items you use your credit card for and how much that should amount to each month. Rather than focus on specific categories, just focus on the total amount you put on your credit card and try to keep it within the range needed to cover expenses.
Automate savings, the rest of the money that accumulates each month can be spent. Set your savings up to auto-deposit into a separate account so that you don’t run the risk of spending it. This way, whatever remains in your checking account is used to cover your monthly expenses.
Use an app to track your spending. There are plenty of apps that do the budgeting work for you. Make sure to review whichever tool you decide to use to ensure that it is secure. These apps typically pull in the data from your credit card and checking accounts to categorize the money you are spending. This makes it easy to check in each month and see if you are on track with your budget or if you have overspent.

Amy Michaels is a Partner and Financial Planner at S.E.E.D Planning Group. She holds the CFP® (CERTIFIED FINANCIAL PLANNER™) designation and oversees all of S.E.E.D.’s  Financial Planning Programs. She created the Sprout program in order to help young people have better conversations about money and finances.

S.E.E.D. Planning Group LLC (S.E.E.D.)is a Registered Investment Advisor (RIA) with the SEC. S.E.E.D.’s team provides investment fiduciary and financial planning services to clients. Our fees are disclosed, easy to understand, and not predicated on product sales.