If you've ever looked at your bank account and thought… "where the heck did all my money go?"… you’re definitely not alone.

The good news?

You don’t need a finance degree to get back on track.

My name is alvaro and today i’m breaking down budgets.

I’ll explain how to create money habits that actually stick… how to build a budget that works for you… what to do with extra money… and what to do if there’s not any extra.

Let’s get into it.

 First… the keys to creating a good budget are:

Keep it simple

Keep it real

And keep up on it.

When i say keep it simple… that’s because many people overcomplicate it.

They go to Microsoft Excel and create these elaborate budgets with formulas and other unnecessary add-ons… then overwhelm themselves and give up.

It doesn’t have to be that involved.

 Next…keep it real… because you want to be honest with yourself when it comes to spending. 

You don’t have to show anyone so there’s no need to be embarrassed.

If you are a smoker… a coffee shop regular… a fast-food lunch-er… make sure you’re marking that down.

Not only does it make your budget more reliable… but it helps you pinpoint the areas you could focus on making changes to later if your budget needs more breathing room.

 You also need to keep up on it.

Reference it at least as often as you get paid.

For most people... That’s every two weeks… but some people get paid every week or monthly… so you may need to adjust accordingly. 

Since not all bills are due at the same time… some pay periods may have more money leftover than others.

Referencing your budget each time you get paid helps you track what’s due… and lets you know what extra money you’ll have until your next payday.

 According to finance-guru Dave Ramsey… 53-percent of Americans are living paycheck-to-paycheck… including more than a-third of people earning over 100-thousand dollars per year!

It’s not always about having more money… but just having a better plan.

Now… budget plans are not a one-size-fits-all solution… so I’m going to go over a few options so you can determine what’s right for you… starting by using technology.

 There are many budgeting apps available… but the easiest way to keep on track is to use one that does the work for you.

Budgeting apps each have their own strengths depending on your goals.

Some are better for tracking spending… others help with debt payoff… or even wealth building.

One thing they all have in common is the ability to access your budget whenever you need it.

That way you can check what you have to spend before going out with friends… and avoid accidently overdrafting your account or not having enough when rent is due.

Apps are also great for building habits.

Reminders and spending alerts encourage you to check your budget more often… and visual tracking, like colorful graphs, make understanding your budget easier.

For ascentra credit union members…financial tools on the ascentra app has very useful budgeting features.

It allows you to create your budget… breaks your spending into categories… and shows how close you are to your budgeted amount.

You can track spending by months… look for trends… and even connect to other financial institutions so you can keep track of all of your accounts in one place.

Setting up bill pay through the app allows you to automatically make payments to help you stay on track and avoid late fees from missed payments. 

For those who are less tech-savvy… the old school pencil and paper method is the most commonly used budget… and is exactly what it sounds like.

Using loose paper or a notebook… you write out your income and expenses by hand.

Make sure you include all forms of income… your paycheck, side-hustle money, child support, alimony, social security benefits… and anything else coming in.

Then… you do the same with your expenses.

This can be a bit harder because there’s typically more streams of money going out than coming in… plus most people buy groceries or gas a few times each month.

I recommend grabbing your last couple of bank statements to help you figure out an average of what your spending… and when.

There are many templates you can find online or just go to ascentra’s website.

You can customize your template to match your needs… and plug the numbers into it.

Remember to be honest and include all of your expenses.

Once you have both totals… add up each section… and then subtract your expenses from your income. 

What’s leftover is your’s to decide how to spend.

The next budget I’m going to tell you about is similar to the pen-and-paper budget… but in this one… there’s no balance left over -- every dollar has a job.

The zero-based budget assigns a goal for your entire income.

Let’s say you make three-thousand dollars.

You would assign all three-thousand across savings, bills, groceries, gas, entertainment and so on… until there’s nothing left unassigned.

 For people who are looking for a looser framework or are newer to budgeting… the
50-30-20 budget simplifies spending into three groups.

Here’s how it breaks down your paycheck:

50-percent is budgeted for needs… like rent, groceries, or insurance…

30-percent goes to wants… like dining out, hobbies, or streaming services…

And 20-percent goes to savings or paying down debt.

A benefit to this plan is that it helps avoid overspending by setting clear boundaries between wants and needs.

 For someone who overspends easily… the envelope system may be a good alternative.

With this budget… as soon as you get paid… you take out what you need for different spending categories… and divide it into multiple envelopes.

All the money you need for groceries goes into one envelope… gas into another… bills in a third envelope and so on.

Once an envelope is empty… you stop spending in that category.

This system helps you avoid overdrafting your account… by preventing you from overspending.

Studies show that using cash and physically seeing money depleting causes people to spend less.

Some people even take it a step further… giving themselves a daily envelope budget.

For instance… say you have three-hundred dollars left after filling your bills, groceries, and other “necessity” envelopes.

Instead of using one envelope to spend the three-hundred dollars throughout the month… you could break that into a daily envelope of ten dollars per day.

What you don’t spend can roll into the next day’s envelope… and if you move leftover funds multiple times… you can use that to treat yourself or put into savings.

 Speaking of savings… the last method is the pay-yourself-first budget… which focuses on building wealth.

With this plan… before you pay any bills… you first move money to savings or investments.

Then you live on what’s left.

Direct depositing some of your paycheck into your savings account can help make this easier… and when it’s “out of sight, out of mind”, you’re less likely to dip into the savings.

 So… what do you do with that savings or other leftover money?

First… establish an emergency fund.

Aim to save for two months of living expenses in case of something major like a job layoff or time out of work due to injury or illness.

Other emergencies to save for could be home or car repairs.

Ideally you want to have some cash reserves so you’re not maxing out your credit cards everytime something happens and putting yourself into debt.

 On that note… you should also use extra funds to focus on paying down debt. 

Not only will that free up more money for you to spend on wants… but it helps save you money and can build credit.

Unless you have a zero-percent-interest introductory offer… loans and credit cards come with interest rates…

So the longer you owe money and the higher the balance… the more money you have to pay.

Your credit score is also partially determined by your credit usage… in other words… the amount of credit available to you that you’re using.

As you pay down debt and lower the usage… your credit score will go up.

I also spoke about this in our credit score video… so make sure to check that out if you haven’t seen it yet.

 After you have paid down debt and set aside money for emergencies… then you can focus on your wants and treating yourself or your family.

We call these “opportunity funds”.

You can create a savings account for a vacation, presents for the holidays, something nice for yourself… or even sports or program costs for your kids.

 Now… what if you figure out your budget and there’s no money leftover for savings or paying debt?

What if instead you have a negative number and owe more than you’re bringing in?

Well… you need to make changes… and fast.

Start by looking at your expenses and seeing where you can cut back. 

This goes back to what i said about being honest about what you’re spending so you can identify easy changes if you have to.

 If you are a coffee-shop regular… think about making drinks at home and treating yourself to a barista-made specialty once a week as a treat instead.

 A recent survey shows the average american worker spends about 16-dollars per day on lunch.

Packing your lunch could save you about 80-dollars each week.

That’s 320-dollars each month… or four-thousand-160-dollars per year.

I don’t know about you… but i could do a lot with an extra four-grand a year.

 Another easy way to cut costs is to cut the cord on streaming services.

Maybe it’s just me… but i don’t have enough time to watch entire libraries of five different streaming services every month…

So… try dropping down to one or two.

If a new show comes out on a different service… drop one and then sign up for the other one…

Binge-watch what you want… and then drop it again before the next billing cycle.

Most streaming services don’t charge you fees for dropping… so you don’t need to feel locked into paying for services you might only use every few months.

 After you’ve gone through what you can cut back… then you should look at your debt.

Can you lower any interest rates?

According to lending-tree… the average interest rate for new credit cards by mainstream companies is 24-point-three-five percent.

Credit unions are more competitive and members with better credit scores get better rates.

If you have high credit card debt and a high interest rate… consider rolling that debt onto a card with a lower rate.

 A consolidation loan may also be an option and can help you in a number of ways.

They combine multiple loan or credit card payments into one at a lower interest rate.

It can save you money and help you pay on time since it’s easier to remember one due date instead of several.

For insight on how consolidation loans can also help your credit… check out the credit score video i mentioned before.

 Once you have your debt handled and begin to see your savings grow… you will understand that budgeting isn’t about restricting you from spending.

Every step you take toward financial improvement is a step toward financial freedom.

You're not just tracking dollars… you’re building peace of mind, reducing stress, and creating options for your future.

Start small… stay consistent… and eventually you can stop wondering where your money went… and instead tell it where to go.

You’ve got this.

Thanks for watching… and remember… there’s no wrong or right way to budget… you just have to find the way that works best for you.