How to Simplify Your Budget (5 Easy Steps)

Wondering how to simplify your budget amid the chaos of life?

When my wife and I first started trying to budget, it was a nightmare.

We had expenses coming at us left and right, no self-control or discipline to budget our money properly, no emergency fund, no savings accounts, no side hustles to make up for the rising expenses, and no real financial goals. Needless to say, we were overwhelmed by all that goes into tracking monthly expenses and sticking to a budget.

We quickly realized that if we didn’t figure out ways to simplify the whole process, we were in for a long road.

If you’re like most people, the word “budget” probably doesn’t fill you with excitement. For many of us, budgeting feels like a necessary evil—something we know we should do but often don’t enjoy.

What we humans like to do:

• spend money
• have a credit card so it makes spending money easy

What we humans don’t like to do:

• use self discipline
• track how much you spend
• saying “no” at the grocery store to those food items we want
• saving money every month for an emergency fund

The good news is that it doesn’t have to be this way!

Budgeting can be simple, painless, and even enjoyable. In this blog post, we’ll show you how to simplify your budget so you can save time and money.

Let’s get started!

How to simplify your budget (101)

1. Know Your Income and Expenses

The first step to simplifying your budget is to simplify our understanding of exactly what we’re trying to accomplish with a budget. Don’t overcomplicate it.

The goal of a budget is simply this: to know exactly how much money you have coming in and going out each month.

If that’s the goal of a budget, then we better make sure that we are actually doing those action items (and not JUST talking about doing them). This may seem like a no-brainer, but you’d be surprised how many people don’t actually track their income and expenses.

This was one area where my wife and I struggled for a long time, but once we because dedicated to tracking our monthly expenses, not spending money needlessly, and saving money as often as possible, everything became easier.

If you’re not already doing so, start by setting up a simple spreadsheet (or using a budgeting app) to track your income and expenses for one month.

Here are some of the best budgeting apps to simplify your budget:

• EveryDollar App
• YNAB (You Need A Budget) App
• Mint App
• Goodbudget App

The easiest way to track everything is by inputting the expense into the app as soon as you make the purchase. 

The key here is not to try and be perfect, but to collect data and build habits.

The more that you can build the habit of tracking every expense right away, the easier it will be in the future to save money, invest money, and have a fantastic financial life long term.

At the end of the month, take a look at your expenses overall and where your money went and see if there are any areas where you can cut back.

As long as you spend less money than you earn, you are on track with your budgeting — it’s as simple as that.

2. Automate your savings, bills, and investing each month

One of the best ways to simplify your budget is to automate your savings/investments and debt repayments. I’ve found that the more bills I can automate, and the more investing and savings I can do without thinking about it, the better I stick to a budget.

Each month, have a set amount of money transferred from your checking account into your savings account and investment accounts.

Similarly, set up automatic payments for any debts and bills you may have so you never have to worry about missing a payment.

If you want a simple financial life, automating as much of it as possible will free you up to focus on everything else you need to hit your financial goals — don’t waste your time on things that we can let technology handle for us.

3. Simplify your budget categories

A lot of people feel the need to have a category for every little item in your budget. If this is you, before you know it you have 400 categories with everything from “coffee” to “dry cleaning” to “attractions while out of town on vacation”.

The issue with having too many budget categories is that it quickly becomes overwhelming, difficult to track, and easy to justify overspending in certain areas.

A better approach is to have fewer, broader categories. 

This will give you a high-level overview of where your money is going each month without bogging you down in the details.

Some examples of broad categories could be:

• Housing/Utilities
• Transportation
• Debt Repayment
• Savings/Investing
• Recreation/Entertainment
• Personal Care/Clothing
• Food/Groceries

This is one of the easiest ways to simplify your budgeting, as the fewer categories you have, the easier it is to mentally handle.

4. Create a simple spending plan for variable expenses

Variable expenses are those that fluctuate from month to month, such as groceries, gas, and entertainment.

These can be tough to manage because it’s hard to predict how much you’ll need to spend in any given month.

One way to simplify your budget is to create a spending plan for these variable expenses. For example, you might decide that you’ll only spend $200 on groceries each month or $50 on entertainment.

An easy way to do this (and to ensure you aren’t abusing credit cards) is to do a cash envelope system where you put $200 of cash into an envelope (labeled “groceries”) each week, and once that cash is gone, you don’t put more in until the new week starts.

You can do the same with other expenses as well — each variable expense gets its own envelope.

This will help you stay on track without feeling like you’re depriving yourself.

5. Review and adjust as needed

Budgeting is an ongoing process, not a one-time event. If you aren’t continually revisiting it, it’s easy to stray from the plan in little ways.

Think about it, it’s easier for an airplane to “course-correct” every 10 minutes than it is for the airplane to try and “course-correct” every 3 hours. Just 2 degrees off in their course early on will result in being grossly off course in 3 hours.

Be sure to review your budget regularly (monthly or quarterly) and make adjustments as needed.

As your income or expenses change, your budget should change with it. By staying on top of things, you can ensure that your budget is always working for you.

Conclusion

Budgeting doesn’t have to be difficult or time-consuming! 

By following these simple tips, you can create a budget that works for you and your family. With a little planning and effort, you can take control of your finances, improve your financial health, and set yourself up for financial success over the long-term.

Start by evaluating your income and expenses, then set some realistic goals. Once you’ve created your budget, stick to it! Review your progress regularly and make adjustments as needed. By taking these steps, you can simplify your budget and improve your financial well-being.

Once you begin implementing these tips, you can streamline your budget and make managing your finances easy peasy! It doesn’t have to be complicated, you just need a simple plan you can follow.

Do you have any other tips for simplifying the budgeting process? Share them with us in the comments below!