Finance Management: How to Track and Organize your Budget

Knowing when and where to spend money is a significant part of financial planning. It’s crucial to manage your funds properly to achieve the much sought-after financial security and help you live a comfortable life. The best way to start managing your finances is by making a budget plan and sticking to it.

Setting up a budget plan provides you with an in-depth look at your finances, allowing you to have a better chance of meeting your personal financial goals. Whether retirement funds, short-term financial needs, or travel plans, following the right budget plan for your income and lifestyle can give you an advantage despite rising prices and declining purchasing power.

Although many understand the importance of managing their finances, some still neglect it. A common reason is that managing finances can be a headache. But there are effective steps you can take to make budgeting more straightforward.

Ensuring a streamlined process can help you maintain the habit of setting a budget, creating a savings plan, and tracking your spending in no time.

There’s no one correct budget for everyone. You’ll need to tailor your budget tracking and organizing habits to meet your personal needs, lifestyle, and goals. Learn more about how you can effectively manage your finances in the simple ways listed below.

Why is Tracking and Organizing Your Budget Important?

Budget tracking and organizing can help you recognize and understand your spending patterns and habits. With this, you’ll see where your money is going and where you can better control it. Once you understand where your money is going, you can steer your spending habits toward your personal financial goals instead.

Many would consider budgeting as additional stress that prevents you from thoroughly enjoying the product of your hard work—when, in reality, it’s the opposite. Consistently following your budget allows you to allocate enough money to support your needs while setting aside a sufficient sum to buy your wants.

Are you someone who spends more on entertainment and recreation? Or do you need more budget allocation for your groceries? Do you tend to save for months and spend all on an international trip? Or do you have a weekly staycation with your family? These are only some examples of the questions you can consider when drafting your budget plan.

Rather than making do with what’s left of your cash, why not afford both your short-term and long-term financial goals?

7 Ways How to Track and Organize Your Budget

It helps to see budgeting as a habit instead of a task. Like your other habits, it’ll take time, effort, and consistency to go from trying to remember to do it to becoming a daily routine. Below are a few ways you can take to get used to your budget plan:

1. Know your financial goals

Before you start dividing and subtracting your income, ask yourself what exactly it is you’re saving for and why. A goal in mind can keep you motivated and consistent in your budgeting efforts.

Keep your goal specific and attainable. Your goal doesn’t have to involve owning personal jets or private islands; you can have smaller, more modest goals such as having a nice dinner date with your significant other or watching a concert from your favorite band. What matters is that your goal is based on your lifestyle and personal wants.

If you’re saving up to buy a new TV for your living room, research beforehand to know which brand and model gives you the most benefit for a reasonable price. When you know what you want, you can build a budget plan that best accommodates your needs.

For example, instead of saying, “I’ll save for a new TV,” which is vague, try saying: “I want to save up for a $400 LED TV for the living room by May next year.” Doing so makes your goal more specific and less daunting to keep in mind.

2. Find the right budgeting method

There are plenty of budgeting techniques you can maximize to fit your budgeting goals. It’s always worth experimenting and trying different methods to find the best budget for you and your lifestyle.

Try one budgeting method for a specific time to better gauge how it suits your routine. It may take some getting used to, so don’t be afraid to stumble here and there. Mistakes are bound to happen; it’s OK. Financial health can be a long-term commitment, and finding a suitable budget allows you to stay on course.

The 50/30/20 method is a popular technique to start with.

With this method, you’ll have to divide your expenses into three categories: savings, needs, and wants. 50% of your net income goes to your needs, and you can then spend 30% on your wants and put the 20% in your savings account or use it for debt payments. This way, you’ll always have a guardrail on how much you can and should spend.

3. Set a comprehensive and realistic budget plan

In setting up your budget plan, keep it realistic to your income and expenses. Keep in mind your priorities, what you’ll need, and—most importantly—what you have. It doesn’t make sense to budget money you don’t have in your wallet or bank. Always take note of three things in planning your budget: your monthly income, expenses, and the total of both.

Keep track of your income, as it may vary monthly, especially if you work two jobs, own a small business, or work freelance. Consider organizing your bills—utility, rent, bank statements—and fixed or variable expenses to have a rough estimate of how much your actual monthly needs are.

Compare the total of your income and your expenses. If your income is more than your expenses, you’ll have more room to decide if you want to spend your spare or save it. However, don’t worry too much if your total income is lesser. You’ll have to adjust your spending habits and see where to cut off certain expenses.

4. Keep emergency funds

Life is full of surprises. And it won’t hurt to be prepared for anything life throws at you. So, set aside a sum of money for emergency purposes. Whether you want to keep it on hand or through a separate bank account, make sure it’s easily accessible and accounted for.

A dependable emergency fund helps you fund expenses when you need them without affecting your other financial plans. Say you’ll need emergency car repairs or an unexpected medical check-up is required; an emergency fund can support you without making too much of a dent in your savings.

5. Maximize online financial planning tools

Today’s highly digitized world has enabled users to track and manage finances wherever they are. With budgeting apps available on every platform, you can put the days of manually itemizing your budget and expenses behind you.

Expense management applications allow you to list your finances and organize them into proper categories to make them easier to track over time. Different apps can offer various services. Some enable users to borrow loans right on their mobile in case of emergencies, while others can automatically pull data from your bank account and credit cards.

If you enjoy planning your budget, consider using Google Sheets or Microsoft Excel as a digital spreadsheet of your budget. Free budget templates and formulas are available online for an easier and more accessible setup.

6. Reduce or limit your debt

If possible, prioritize paying off your debt payments. Doing so can free up unnecessary stress in your mind and your bank accounts. When you’ve paid off your debt, you’ll be able to focus more on saving for your financial goal, investing your money for a passive income, or your retirement.

However, you can’t deny that many would need to borrow or take out loans.

Taking out a mortgage, student loans, or buying a car through monthly installments can be a possibility. But it’s essential to get the lowest interest rates possible and pay off as much as you can to avoid additional charges. Account for your debt payment as a priority in planning your monthly budget.

7. Track your financial progress

When you’ve taken the necessary steps to track your finances and organize your budget plan, don’t forget to take a step back and see your big picture; it can be easy to get lost in the numbers and formulas of financial planning. It’s also important to review your budget plan and check if it aligns with your personal financial goals while providing for your needs.

You, your goals, and your finances can change—not to mention the fluctuating market, gasoline, and utility prices. Ensure your budget plan is firm enough to support you and flexible enough to adapt to change. A budget plan doesn’t mean you must stop spending on things you enjoy. In fact, it ensures that your income meets all your needs without putting you in a financial hole.

Set Up Success With Your Budget

Properly managing your finances and having the discipline to maintain the habit of doing so are critical life-planning hacks that can help you build a financially supported future. The right budget plan allows you to gain control of the financial reigns of your life. Though it can be tedious, you’ll have more resources to experience life beyond work.