Research Guides: Financial Literacy: Budgeting

Making a Budget

To successfully manage your finances, whether you're working to pay off debt or seeking investment opportunities, building a budget is a crucial first step. A budget helps you track where your money is coming from and where it's going, allowing you to make informed financial decisions. By understanding your cash flow, you can identify areas where you can save, invest, or cut unnecessary expenses. Many budgeting tools are available, including apps, calculators, and templates, which simplify the process and keep you accountable. Remember, the key to financial success isn’t just creating a budget—it’s consistently sticking to it and reviewing it regularly.

Managing a Cash Surplus

If you find yourself with extra cash, there are several ways to put your additional money to use. Consider the following options:

Build an emergency fund to cover unexpected expenses and protect your financial stability.
Pay down high-interest debt such as credit card balances or long-term loans to reduce your financial burden.
Increase your retirement contributions to ensure a more secure financial future.
Invest in stocks, bonds, or cash equivalents to grow your wealth over time.
Adjust your budget to allow for a few discretionary items, such as entertainment, travel, or hobbies, without overextending yourself.

Managing a Deficit

If your expenses exceed your income, it’s important to find ways to cut costs and regain control of your budget. Here are some ideas:

Prepare affordable meals at home instead of dining out, and plan your meals to save on groceries.
Cut non-essential entertainment costs, like streaming subscriptions or dining out frequently.
- Take advantage of free services such as borrowing books, audiobooks, and media from your local library.
Conserve energy at home to reduce utility bills. Simple changes like adjusting your thermostat or using energy-efficient appliances can make a difference.
Negotiate with your credit card company to reduce interest rates, which can lower your overall debt repayment.

50/30/20 Rule

A helpful budgeting guideline to follow is the 50/30/20 rule:

50% of your net income (after taxes) should be allocated to essential living expenses, such as housing, food, utilities, and transportation.
30% of your income can be set aside for discretionary spending—your "wants." This might include things like dining out, entertainment, and non-essential shopping.
20% of your income should go toward your financial goals, whether that's building savings, investing for the future, or paying down debt.

Additional Tips:

Regularly review your budget to ensure you're on track with your goals and make adjustments as needed.
Utilize free online tools or apps to track spending and savings, helping you stay mindful of your financial decisions.

Budgeting Guides

Budgeting Videos
Video developed by 360 degrees.
Budgets 101 (consumer.gov)
Outlines the steps and reasons for making a budget, and provides worksheets and videos to explain the process.
Budgeting Basics Guide
An overview on budgeting basics, creating a budget, benchmarks, and situational budgeting.
5 Step Guide on Budgeting (NerdWallet)
Provides steps and tools on how to budget using the 50/30/20 rule.

Other Budgeting Tools

Budgeting Apps

EveryDollar
EveryDollar is another zero-based approach to tracking your budget. This app does not require you to sync your financial accounts, but that does mean that you need to enter every transaction. If you would like to sync your accounts, you will need to upgrade to the paid version.
Fudget
The Fudget budgeting app lets you manually set up your budget, track expenses and see how much money you have free to spend. If you prefer a minimalistic approach to money management that’s akin to budgeting with a pen and paper, Fudget is ideal. However, the app’s simplicity may be a drawback for budgeters with more complex needs as it lacks features like automatic syncing, investment tracking and financial analysis (Source: Forbes).
Goodbudget
Goodbudget uses the envelope budgeting method, where you allocate your incoming funds towards different envelopes or categories. However, since the basic and plus versions do not sync with your bank accounts, you will need to manually enter income and spending.
Honeydue
Honeydue allows you and your partner to see both financial pictures in one spot, including bank accounts, credit cards, loans and investments. However, you can choose how much you share with your significant other.
Monarch
Monarch Money is a subscription-based app that launched in 2021. In addition to being a budget tracker, it also includes features to help you understand your full financial situation, such as net worth and investment tracking. When you subscribe, you’ll be able to sync unlimited accounts, invite unlimited collaborators to share in your budget, and create custom financial goals for the future (Source: Fortune).
Personal Capital
Personal Capital allows you to sync your financial accounts in one place to track your net worth, plan for the future with the Retirement Planner, and use the Fee Analyzer to check portfolio fees
PocketGuard
Free budget app, connects your checking, credit and savings accounts and detects recurring bills and income.
YNAB
YNAB is a zero-based budgeting app option that also offers educational resources. Once your accounts are synced up, YNAB will suggest allocations across various categories such as savings, spending, and debt. Used long term, it will teach intentional use of each dollar you earn. Though it is pricier than other options, they do offer a free trial year for college students.
Zeta
Zeta is a free budgeting apps designed specifically for couples, joint finances or not. The app caters to all types of couples, including those who are living together, engaged, married, or new parents. You can sync various accounts to track spending, see your net worth, and manage bills together (Source: Investopedia).