BUDGETING CAN BE A CHALLENGE. HERE ARE 5 TIPS TO GET STARTED

Budgeting is key to managing your finances, whether you’re trying to pay off debt, start a rainy day fund or deal with the consequences of inflation.

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Creating a budget is much like trying to eat better or exercise more — everyone tells you it’s good for you, but it’s hard to get into the habit, said Colleen McCreary, consumer financial advocate at Credit Karma.

“A lot of people think it’s over-complicated and a hard thing to do,” McCreary said. “Much like going to the gym, the hardest part is showing up, so you just have to decide that you’re going to try it out.”

Even with prices high due to inflation, Elena Pelayo, educator at How Money Works, a financial literacy organization, said there are small steps you can take to manage your money. These include looking at how many online subscriptions you pay for or how often you eat in restaurants and cutting back where you can.

Here are five important steps when you’re ready to create a budget:

1. WRITE IT DOWN

Writing down all of your expenses is crucial, said Pelayo. She suggests recording every penny that you spend rather than trying to approximate, which can lead to errors.

Pelayo recommends using whatever method fits you best, whether that’s writing it down on paper, creating an Excel spreadsheet or using a website.

Next, she recommends categorizing where your income should be spent. Always start off with covering your basic needs.

A well-known budgeting system is the 50/30/20 rule, where 50% of your income is allocated for necessities like food and rent, 30% for things you want, and 20% for savings and debt repayment.