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The Simple Way to Track and Save Money

The Simple Way to Track and Save Money

I like to keep track of what I’m spending, what money is coming in, and what my outgoing money is spent on. It helps me to save money for expected and unexpected expenses, as well as setting money aside for vacations and all those seasonal holidays that involve spending money on gifts (Christmas, Birthdays, Weddings etc.). Usually, I use a spreadsheet for this — Excel, in my case. However, I know of many people that have an aversion to spreadsheets, in particular, getting the formulas right and making calculations across several sheets… far too complicated and too much effort.

This is where You Need a Budget (YNAB) helps by providing you with software that assists you in managing your budget. Plus, unlike Mint, it supports more than just the US and Canada, and not only that, YNAB teaches you a 4-rule method to manage your money with the goal of saving enough so that you can live off the previous months savings without spending any of this month’s income.

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Here’s the 4-step rule:

  1. Give Every Dollar a Job.
  2. Save For a Rainy Day.
  3. Roll With the Punches.
  4. Live on Last Month’s Income.

1. Give Every Dollar a Job

The principal behind this rule is to assign your money to an expense, whether that is rent, groceries, etc. So after you add a checking account and put in a total, you need to assign your money to do a job. Any money not assigned can be rolled forward to future months.

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    2. Save For a Rainy Day

    This rule is all about planning ahead. For example, you have home insurance to pay for and it’s due in 6 months. Budget for it across 6 months, so that you don’t spend money impulsively. You can use this rule to save up for vacations and other high ticket items (a new couch or TV). The same method can be used to set aside money for unexpected bills, such as car or home repairs.

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    3. Roll With the Punches

    This rule is all about adjusting your budget when you overspend in one category. This happens sometimes; for example, you spend more on books than you intended, in which case, you can adjust your budget by moving some of the money budgeted towards clothes, or have it deducted from next month’s budget so you spend less on books in the following month. It’s straight forward to put what you are spending by adding a new transaction. This can be income or expenditure, and the main budget sheet will keep track of it for you.

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      4. Live on Last Month’s Income

      This is the main aim of this method. To save up a month’s worth of paychecks before the month has started.

      One of the useful features in YNAB are the charts that let you see where the bulk of your money goes. This can help you to re-budget and see which areas of your life takes up most of your income. You these reports to help you re-adjust your budget if necessary or to create targets. For example, if food expenses eat up a large percentage of your spending, you can try and adjust it to make it more proportional to the other parts of your life.

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        If you follow this method that YNAB coaches, then it can be a useful personal finance (or small business) budgeting tool. It’s free to try for the first 30 days, and if it’s for you, then it only costs $60 to get a license for the software. YNAB also provides a bunch of home study guides and online classes to help you learn and this method.

        More by this author

        Hoi Wan

        Hoi is a mobilist who blogs about technology trends and productivity.

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        Last Updated on January 21, 2020

        How to Develop a Millionaire Mindset in 6 Simple Steps

        How to Develop a Millionaire Mindset in 6 Simple Steps

        We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

        It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

        How do you go about developing that millionaire mindset? By following these simple steps:

        1. Focus On What You Want – And Take It!

        So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

        Millionaires play to win, not to avoid defeat.

        This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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        2. Become Goal-Orientated

        It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

        Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

        Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

        Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

        You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

        If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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        If you are to become a millionaire, you need to start accumulating money.

        Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

        3. Don’t Spend Your Money – Invest It

        The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

        Stop working for your money and make your money work for you.

        Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

        There’s not just the stock market — there’s also property, and your own education.

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        4. Never Stop Learning

        The best thing you can invest in is yourself.

        Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

        Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

        Learn everything you can about how economics works, how the stocks markets work, how they trend.

        Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

        Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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        5. Think Big

        While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

        There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

        Aim for the stars, if you fail you’ll still be over the moon.

        6. Enjoy the Attention

        To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

        Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

        If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

        Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

        More About Thinking Smart

        Featured photo credit: Austin Distel via unsplash.com

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