blue ballpoint pen on paper beside calculator by Ashraf Ali courtesy of Unsplash.

Essential Budgeting Skills to Learn for Financial Literacy Month

Scott McEachern |
Categories
Financial Literacy

Financial Literacy Month is a great opportunity to deepen your understanding of money management, financial planning, and wealth-building strategies. Being financially literate isn’t just about knowing how to balance a checkbook; it’s about gaining the knowledge and confidence to make sound financial decisions that support both your short-term needs and long-term goals. This week we’re going to dive into budgeting.

Budgeting: Your Foundation for Financial Success

Budgeting is a fundamental financial skill that helps you take control of your money. It's not just a practice reserved for those trying to get out of debt; budgeting is essential for anyone looking to achieve financial stability. A good budget reflects your income, expenses, savings goals, and financial obligations, providing a clear picture of where your money goes each month.

Why It Matters

Budgeting helps you understand your spending habits and ensures you're living within your means. When you track your income and expenses, you can identify areas where you might be overspending and make adjustments to free up funds for savings or debt repayment. A solid budget is a roadmap to financial freedom, empowering you to make intentional choices with your money.

How to Get Started with Budgeting

Start by listing your income and expenses. Break down your expenses into fixed costs (like rent and utilities) and variable costs (like dining out and entertainment). For those new to budgeting, the 50/30/20 rule can be a useful framework:

  • 50% of your income for needs (housing, groceries, utilities)
  • 30% for wants (entertainment, dining out, non-essential purchases)
  • 20% for savings and debt repayment

Consider using budgeting apps like Spending Tracker (my personal fav), Mint, YNAB (You Need a Budget), or EveryDollar. These tools make it easy to categorize expenses, set financial goals, and receive notifications when you approach your spending limits. Tracking your spending may feel tedious at first, but the benefits are undeniable. Over time, budgeting becomes a habit, and you'll likely find yourself making better financial decisions intuitively.