Four Simple Tips for Effectively Budgeting Your Money

Plan ahead so that you can save, spend, and invest wisely.

Budgeting is still one of the best ways to take charge of your finances, but how do you even get started? "Start with taking an honest look at your cash flow—what comes in, what goes out, how much does it fluctuate week to week or month to month? Take that foundation and be realistic with your budget," says John Durrant, executive vice president of Capital One. Budgeting does not have to be complicated for most of us; in fact, you can get started at any time and make small steps toward a workable budget that adjusts as your finances change.

"We know that one of the biggest challenges and stresses faced across all generations continues to be money. No question, money is emotional, and it's personal. Don't let that stress stand in the way of your financial goals—be honest with what you have, what you can save and the life you want to have," says Durant. "Recognize what works best for you (and avoid comparing yourself to others)."

jars filled with money for saving
JGI / Jamie Grill / getty images

If you're ready to take control of your finances, consider these four simple steps for getting started with a budget. And, as always, speak to a personal financial advisor if you have questions or need additional help.

Calculate how to pay off any debts.

According to Durant, the most important step thing you can do is just get started on budgeting. Tackle high-cost debt like credit cards. High interest rates on debt can make it cost more over time, so it's a good idea to reduce and work toward eliminating that debt from the beginning. "Family financial literacy and money-management skills have become even more important than ever," he says. "Have the conversations and take control—there are so many valuable technologies out there that can help you track, manage, and save your money."

Know key retirement basics.

The next step is to start planning for retirement. The earlier you begin putting aside money for retirement, the better—but that doesn't mean that you can't get started at all if you are older. "Take advantage of a 401(k), especially if you have any kind of matching from your employer," says Durant. "It's literally free money and 100 percent return on day one. There's no way to beat that." You may also want to consider IRAs, which can have tax advantages. Retirement can be a complicated planning process so it's a good idea to consult with a financial expert for personalized advice or Human Resources department if you're setting it up through your job.

Talk to financial experts.

You don't need to tackle your finances alone. "Capitalize on free financial programs that can help you map out your future," says Durant. For example, Capital One offers a program called Money Coaching that includes a free initial consult with a Certified Money Coach and is available in Capital One Cafes. Other banks and financial institutions may offer financial coaching programs as well. Plus, you can always use financial apps like PocketGuard or Mint that provide tips based on what you've entered about your current finances and future goals.

Look for ways to save.

Trying to save money can feel like you are being forced to do without things you love. "Don't look at the sacrifice of cutting your budget but find new ways to do things," says Durant. "Little savings can add up big over time—look for ways you can cut your spending and put those savings to good use." You can make short-term savings goals for a big purchase or long-term savings goals like for emergencies and retirement. There are several ways to make saving money a fun experience, like rewarding yourself with a small treat if you save a certain amount each week or using free resources.

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