• Keeping close track of your money is a simple way to improve your finances.
  • Housing, transportation and food are Americans’ most expensive budget categories, according to the Bureau of Labor Statistics.
  • People are often overly optimistic about costs until they’ve taken the time to track their expenses and spending. 

Inflation and mounting credit card debt are causing financial stress for most Americans. To manage finances better, experts recommend creating a budget. Billy Hensley of the National Endowment for Financial Education emphasizes that a budget helps understand spending patterns.

Steps to Build a Better Budget:

  1. Track Spending: Review spending over the past three months to set a realistic budget.
  2. Use Tools: Utilize spreadsheets, pen and paper, or budgeting apps like Goodbudget and YNAB.
  3. Cash Stuffing: The envelope method helps control spending by using cash for expenses.
  4. 50/30/20 Rule: Allocate 50% for needs, 30% for wants, and 20% for savings.
  5. Reverse Budgeting: Prioritize savings first, then cover needs, and spend the remaining on wants.

Avoid Common Mistakes:

  • Save for emergencies and irregular expenses.
  • Be realistic about spending categories.
  • Communicate with partners about expenses.

Financial experts advise being flexible with budgeting strategies and giving oneself grace for mistakes.