A budgeting app can help reduce the amount of time and effort you have to put into creating a budget. Some budget apps go beyond that: they also help you in the process of implementing the budget. It is for these reasons that you may find yourself inclined to start using a budgeting app. That would then lead you into wanting to know what the use of a budget app entails. In other words, you may find yourself wanting to know what exactly you need to do, in order to tap into the benefits offered by budgeting apps. That is the question we will be attempting to tackle, as we give a step by step guide on how to use a budgeting app.
If you want to use a budgeting app, you will need to:
Download and install the budgeting app
So you first decide on which specific budgeting app you are to use. There are dozens (if not hundreds) of budgeting apps in the market, and you need to explore several, before ultimately settling on one. You could opt for one of the free budgeting apps. Or you could opt for one of those budgeting apps that have to be paid for. You could opt for a budgeting app that only has basic features. Or you could opt for one with sophisticated features. You could opt for a budgeting app that is based on the traditional (incremental) budgeting method. Or you could opt for one that operates on zero-based budgeting… Just ensure that the budgeting app you settle on is one that is ideal for your needs. And after selecting the specific budgeting app you will be using, go ahead and download it. Ensure that the source you are downloading the app from is a trustworthy one. The actual download and installation process should be straightforward. On most app stores, once you click on the ‘Install’ button for the budgeting app you settled for, it should be almost instantly downloaded and installed on your device.
Explore the expense categories in the budgeting app
A budgeting app will typically have expense categories which you (as the end user) are expected to fill figures into, in order to come up with an actual budget. Explore the respective categories, to identify the ones that are applicable to you. Some budgeting apps allow you to create your own expense categories, in case the ones that are available by default don’t sync with your circumstances.
Fill in the income details
This is where you are expected to enter the details for the income that you are budgeting for. The most important thing at this point is to ensure that all your income sources are captured. If you are on a fixed salary, this should be easy – as it is just a matter of entering the salary figure. But if you are on a variable income, it can be a little bit complicated, and you would probably have to make some approximations. Just ensure that you enter the right income details.
Fill in figures for the various expense categories
This is the most crucial point in the budgeting process. It is at this point that you make decisions on how much money you are to allocate for various items. It is also at this point that you get to differentiate your needs from your wants, then prioritize the needs over the wants. The most important thing is to ensure that your allocations are truly realistic. You also need to ensure that all your expenses are captured in the budget. You of course also need to make allocations for emergency savings as well as savings for the various goals you are working towards.
Consider linking the budgeting app to your accounts
Most budgeting apps have the capability to link with accounts and credit cards. The objective behind this is to track expenses as they are incurred (in real time). The end goal is to ensure that the budget is actually being adhered to. You may (understandably) be uneasy about the idea of granting the app full access to your account and credit card transactions. But if the people behind the app are trustworthy and the app is secure, there should be no reason for you to be too worried. But if you ultimately decide against linking the app to your accounts and credit cards, you would need to be logging the expenses in real time as they are incurred, and that is quite a bit of work.
Ensure that each expense is logged into the app
The idea here is simply to ensure that the budget you created using the app is actually being adhered to. If you opted to link the budgeting app to your bank accounts and your credit cards, some of the expenses that are incurred would be automatically logged into the app. But for stuff that you pay for in cash, you would probably need to do the expense logging manually. Just ensure that each expense is captured. This is really just a question of figuring out what expense category it belongs to, and then ensuring that the amount you spent is captured there. It would then be deducted from the amount you had allocated for that particular expense category.
Ensure that you don’t exceed the spending limits
Most budgeting apps have the capability to detect when you are nearly exceeding the spending limits you set up for various expenses. They then alert you of this fact. Of course, you can always adjust the limits upwards and the app won’t stop you from doing so. But if you keep on doing this, it will beat the purpose of setting up the budget. If you have to go beyond the limit you had set for any expense category, you need to figure out which other expense category you would draw money from to cover the gap. An important aspect here is to ensure that you don’t raid your emergency savings or the savings for your various goals to cover the gap. You should only tap into your emergency savings if whatever is causing you to go beyond the spending limits is an actual emergency. Otherwise if you tap into your emergency savings for non-emergency expenses, then an actual emergency comes up, you would find yourself in a hard spot. Similarly, if you keep on raiding the savings you had allocated for your various financial goals, it would mean that you end up not achieving those goals on time (or at all).