When I was a teenager, before I had a debit or credit card, my father taught me how to manually balance a checkbook. He made me keep every receipt from my purchases, and at the end of every week we would sit down and do the math to see my current checking balance. If the total matched my most recent bank statement, then we were done. If it didn’t, we poured through each purchase to find the inconsistency. This practice taught me some valuable lessons, like making sure you didn’t get overcharged or ensuring you didn’t overdraft. However, one major lesson was lacking from my father’s teachings — the necessity of budgeting. In this post, we will discuss my favorite budgeting application, Mint.
What the Heck is Mint?
For those who are unaware of the finance application the title refers to, let me introduce you. Mint is a free, web-based financial management service. It allows the user to connect their banking accounts, loan accounts, investment accounts, and more. Each transaction is placed into a spending category, which can individually be tracked and managed. It gives you a nice visualization of your spending every month, and it allows you to get a grasp of where all your money is going. If your total budget is less than your monthly income, it even allows you to set financial goals that can be reached with the surplus money saved.
Mint may not give you the most comprehensive tools for investment analysis, and it does take some work to ensure transactions are properly categorized, but it is a simple, elegant, and valuable tool to help you track and manage your finances.
Why You Need a Budget
In short, you will never be able to identify financial problems, opportunities, and assets unless you are able to track every single dollar that you spend. This is a pretty simple concept, but the value was lost on me until recently.
Prior to having a budget, the workings of my bank account were essentially a mystery to me. While I was a student, I would get regular money (in the form of student loans) that was to last me the entire semester — roughly four months. I was supposed to spread the money out in a way that made sense, that way I would have enough to last the entirety of my term. Yet, this never seemed to happen. For the first month, I lived like a king. I ate out almost every night, went out drinking, and bought generally frivolous items. Life was good at the beginning of the semester.
This would continue until I reached the end of the semester. Then, I was forced to be absolutely miserly. My truck never had more than a quarter tank of gas, my fridge that was once full of food and beer was barren, and every transaction was painful. All I could do was pray that nothing unexpected would come up that would break me financially. I got lucky sometimes, but more often than not, I did without. Not because of a lack of resources, but because a lack of a budget.
Take Control of Your Spending
Because I never had a grasp on my spending, my finances essentially took control of my life. I was at the whim of circumstance, and any unexpected event could have ruined me. Now that I have a budget with Mint, I am the one in control. It has allowed me to pay all of my bills on time, create an emergency fund, and to get ahead on my debt repayment.
The best thing about setting a budget is the peace of mind it brings. I used to wake up in cold sweats worrying about money. That is, of course, if I could get to sleep. It lead to a series of health problems. In fact, I experienced some nasty anxiety attacks on several occasions, something that I had never experienced before. However, all of those issues evaporated once I got my finances in order. Money doesn’t buy happiness, but it definitely reduces the worry in your life.
Budgets may not be sexy, but they are useful, and the power they grant you is very real.
P.S. Sorry for the shorter post today. We just had our kitten spayed, so I am a little wiped out! Here is a not-so-happy picture of her: