Budgeting Simplified

21Apr08

The last thing people want to do once they start working is to budget. Who doesn’t want to spend their hard earned money on a fancy dinner, or a new stereo sound system? Spending less than you earn is the key to financial prosperity. You’ll have money for an emergency, money to invest, and a peace of mind.

Now that you’re over the hurdle of why you should budget, the next step is how do you actually do it?

Mint.com

This free web application is a true gem. Budgeting can’t be any simpler than this, because Mint actually figures out a budget for you! Based on your past spending habits Mint will see exactly how much you spend on shopping, fast food, gas etc and then set a reasonable limit for you.

Easily visualize how you are spending money as a whole

Tracking your budget made easy!

Signing up on Mint is easy and free. You might ask, “Sheehan, is entering all of my credit card and bank login information really safe?” My response to that is, if you trust Quicken or MS Money to do the same thing, why not do it for free? Mint.com is secure and doesn’t actually store any information, if you want to get into the technical details of their security system, by all means ping me because I love a good geeky tech debate.

Now What?

After a single month of budgeting you will have money left over. What to do now? Budgeting is only half of the battle, you need to figure out what you need to do with this excess money. It all depends on your financial state, and what you want to do in the long run, like maybe put a down payment on a BMW, or save up for a trip to Europe. Regardless, put that extra savings into a high-yield savings account so you can start earning interest on it.

Automate with a Savings Planner

There is a common motif going around that American’s are lazy. American Programmers/Software Engineers/Technology folks like me are even lazier. I don’t want to transfer my budgeted savings to a high yield account every month by myself. Thats too much work. Yeah it only takes about 5 minutes to do it, but time is money. Five minutes can be spent sleeping more, digging, or jammin’ out to the intro of some random Tool song.

What is a lazy fratboy investor to do? ING Direct offers an automating savings plan which lets you schedule how much you want to transfer between your checking and savings accounts on a daily, weekly, monthly, or yearly basis. Set it and forget it. In no time you will see your savings begin to grow. You aren’t limited to ING Direct. Wells Fargo, BofA and other banks offer a similar feature on their website, so go out there and look into it!

This same concept can apply to your credit card bills. Pay the balance in full every month. Most all credit cards offer some sort of BillPay service which lets you schedule your payments. Set it and forget it. Once you’ve setup the infrastructure (I’m in IT, I had to throw in some buzz words) of paying your bills every month, and saving every month you will have the time to focus on other things like your investments, or life in general.

My Suggestions

I understand that a lot of fratboy investors don’t really know what to do with their extra money so they go off and spend it. If you live with your parents I realize you’re saving a lot of money which can be spent on hitting the bars after work. I’m not saying forgo your beer, but maybe cut out happy hour one day a week. You’re still enjoying life. With your savings try letting your money work for you.

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One Response to “Budgeting Simplified”


  1. 1 Track Your Investments With CakeFinancial « The Fratboy Investor

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