How I Keep My Budget Simple | Personal Budgeting Tips

Summary

In this video, the creator shares their simplified approach to budgeting, focusing on key strategies that have helped them stay organized despite life changes. They recommend consolidating categories like 'Essentials' and 'Variables' for easier tracking, using technology to automate payments and sync accounts, and leveraging credit card rewards responsibly. They also emphasize the importance of emergency funds, rounding income and expenses for better preparedness, and conducting regular financial check-ins. The video encourages viewers to try these methods for a more manageable and stress-free financial routine.

Takeaways

• 📋 Simplifying Budget Categories: The speaker recommends simplifying budget categories, combining all essential recurring expenses like car insurance and phone bills into one 'Essentials' category to make budgeting easier.
• 🛒 Variables Category: The speaker created a 'Variables' category for fluctuating expenses like gas and groceries, which vary month-to-month and require more attention during budgeting.
• 🎮 Eliminating Entertainment Budget: The speaker used to set aside an entertainment budget but found it unnecessary, as they usually ended up spending less than the allocated amount.
• 📱 Using Technology Wisely: The speaker advocates for automating transactions, syncing accounts, and using technology like iPads for organizing finances, making the process more efficient and less stressful.
• 💳 Credit Card Rewards: The speaker emphasizes that if credit card usage is controlled, utilizing rewards points for expenses like gym memberships can be a smart financial strategy.
• 💼 Emergency Fund Focus: Instead of saving for large, daunting emergencies like 3-6 months of living expenses, the speaker recommends starting small, such as saving for minor car repairs, and building up from there.
• 💸 Rounding Up and Down: The speaker advises rounding down income and rounding up bills to mentally prepare for lower income or unexpected expenses, helping to stay within budget.
• 📅 Regular Budget Check-Ins: The speaker regularly checks their budget and banking apps, which helps maintain personal accountability and avoid careless spending.
• 💰 Automating Investments: The speaker automates their monthly investments to ensure consistent contributions without having to actively think about it, aligning with the philosophy of 'set it and forget it.'
• 🧠 Visual Budgeting: When needing to visualize their budget, the speaker uses tools like the iPad's Freeform app, allowing them to brainstorm and dump financial ideas onto a blank page for better clarity.

Q & A

What prompted the speaker to make a personal finance video?

The speaker wanted to create a personal finance video because the New Year was approaching, and they felt it was a good time to share their budgeting strategies for others to try.

What is the speaker's approach to simplifying budget categories?

The speaker simplifies budget categories by combining similar expenses into broader categories. For example, instead of having separate categories for monthly bills, they group all fixed monthly expenses like insurance and phone bills into an 'Essentials' category.

How does the speaker handle variable expenses in their budget?

The speaker creates a 'Variables' category for expenses that fluctuate, such as gas and groceries, which require more attention in the budget because their prices vary from month to month.

Why did the speaker stop allocating a separate budget for entertainment?

The speaker found that when they allocated a budget for entertainment, they often ended up spending less than planned. To 'make the budget accurate,' they would then find ways to spend the remaining amount unnecessarily.

What technology does the speaker use to manage their finances?

The speaker uses technology to automate transactions, sync accounts, and make the budgeting process easier. They use apps to automate bill payments, investments, and consolidate account information on a single screen.

Why does the speaker advocate for credit card rewards despite some people's concerns?

The speaker believes that if someone can control their credit card spending, they can take advantage of rewards points, which provide benefits like cashback. The speaker has never paid interest on credit cards and uses them for necessary expenses.

What is the speaker’s perspective on emergency funds?

While the common advice is to save 3 to 6 months of emergency funds, the speaker recommends starting smaller, like saving for minor emergencies (e.g., a car battery replacement) and building from there. This approach is less intimidating and helps celebrate small wins.

What is the concept of rounding up and down in budgeting?

Rounding up and down involves preparing for lower income and higher expenses than usual. The speaker rounds down their income to a lower amount and rounds up their expenses, ensuring they always have extra money at the end of the month.

How often does the speaker perform a budget check-in?

The speaker performs a budget check-in daily for about 5 minutes. They review their expenses, make sure they are on track with their budget, and check if any emergencies or deviations need to be factored in.

What does the speaker believe is the most important part of regular budget check-ins?

The speaker emphasizes personal accountability as the most important part of regular check-ins. This habit keeps them on track with their budget and prevents careless spending.