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Financial Literacy
Course: Financial Literacy > Unit 11
Lesson 2: Saving and budgetingOptions for tracking and managing your spending
Creating a budget may seem like a daunting task, but it doesn’t have to be. Learn about the tools and techniques that can help simplify budgeting and help you reach your financial goals.
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Khan Academy doesn’t provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
The material provided on this website is for informational use only and is not intended for financial or investment advice. Khan Academy assumes no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment options.
Khan Academy doesn’t provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
Want to join the conversation?
- is it okay to start saving when your 15?(5 votes)
- the sooner the better! be prepared to lose it all one day, but know you have the power to start over again(8 votes)
- yall should for real make this app for late teens who are moving out, it would be really helpful. with someone who really struggles with math and saving issues this being made into an app would be verry helpful @khanacademy(3 votes)
- So, I went to a search engine and asked it to find money management apps for singles. In less than a second, I had a list of 8 in front of me. There's no need for Khaan Academy to get into the business. It's out there for you to get with a few keystrokes.(3 votes)
- Is is better to start saving at a young age for college funds or traveling purposes for business needs?(4 votes)
- saving is If you are forgetful, having multiple cards to pay off might not be a grea(3 votes)
- which tracking method is proven to be more practical?: digital or pencil-paper?(2 votes)
- what is something people spend there money on the most other then bills(1 vote)
- Some people spend on luxuries and experiences (like cruises and concerts). Some people buy scratch-off lottery tickets, which isn't bad or sinful, just unlikely to pay off. As for what people spend money on most, other than bills, I suppose there are myriads upon myriads of possibilities.(2 votes)
- whats the best way to start saving money(1 vote)
- You can get a piggy bank or a can and put change in it when you get older you go to your local bank and open a savings account that is the way i would do it.(2 votes)
- this is rlly helpful(1 vote)
- how do i show that i have completed each lesson?(1 vote)
- Money is nice, and necessary, but don't fall into the trap of believing that you "are your bank account." One can be "rich" in many ways besides just money(1 vote)
Video transcript
Keeping a detailed budget can be one of the best ways
to help you save money and avoid overspending, but not everyone has the time, or the desire, to sit down with a spreadsheet
on a regular basis. You may have even tried
to keep a budget before but it didn’t work out – you’re not alone. Fortunately, there are some ways
you can manage your money without a traditional spreadsheet. Now, the most important part
of managing your money is making sure your needs are covered. This will require a bit of math, but it doesn’t need to be complicated. Start by figuring out all
of your regular monthly expenses. This will be your regular bills, like rent or mortgage payments, all your utilities, insurance payments and any other loan or credit card
payments you make each month. Then, estimate your other
necessary expenses like what you spend
per month on groceries and transportation costs. Add all these costs up
and you’ve got your baseline – what you need to cover every month. When it comes to paying
your regular bills, setting up alerts on a calendar can help to remind you to pay them
a few days before they’re due. Or to make it even easier, you can try automating
some of your payments. You can sign up for automatic
bill pay with your utility companies, lenders, and in some cases
even with your landlord. The amount you owe
each month will be automatically withdrawn from your bank account, or charged to your credit card. Automating payments can save you
time and effort every month and help make sure
your bills are paid on time. Just be sure you always have enough
money available in your account to cover all
of your automatic withdrawals. And if you use a credit card, make sure you can pay
the balance in full each month in order to avoid paying
interest on those charges. If you change your mind and decide
that automatic payments aren’t for you, you can always cancel
your scheduled payments and go back to paying manually. Automatic payments
can also be a great way to help you systematically pay down debt if you set up extra payments
toward your loans. And they can help you grow your savings if you set up regular contributions
to a savings account. This can be especially helpful,
if you’ve had trouble saving in the past. To help yourself prioritize saving, you can try thinking of saving
as a bill you have to pay to yourself. Even if it’s just a small amount, making automatic payments to yourself can help you build up an emergency
fund or a retirement account. Once you’ve taken care
of your regular bills and savings, you have a bit more
flexibility with what’s left. But if you find yourself
overspending from month to month, you might want to try
tracking your spending. One simple way of doing this
is using the “envelope method.” While it might sound old-fashioned, putting a set amount of cash
in envelopes each month for different purposes like groceries, transportation, dining out, and just general spending money can help you set limits
on what you spend. So then, if you find
yourself spending more than you had available in any of your envelopes, you might need to make adjustments
the following month. Another way you can keep track
of your spending with little effort is to use a single debit or credit card that can track and categorize
your expenses for you. By keeping all
of your purchases on one card, you’ll only have one monthly statement that shows how much you’ve spent
and where you spent it. So it can be easier to see
where you might be overspending and how you might cut back. Plus, many banks now have online tools that can categorize
your spending for you, so you’ll be able to get an idea
of what you spent on different things like entertainment,
groceries or dining out. Many banks also offer account alerts that will let you know when
you’ve reached certain spending limits. If using a single card is too limiting, money management software or apps
can help you link all of your accounts and automatically track
your spending and saving for you. Many of these have
even more detailed tools to help you analyze your spending and they also have alerts
that can warn you if you might be overspending
in one category. And finally, if you feel like setting
limits on your spending is a challenge, consider making one of your goals a small reward to yourself. Whether it’s a treat
at the end of a long week or putting aside a little extra toward a large purchase you really want, rewarding yourself might help you
feel more motivated about managing your money – as long as it doesn’t push you
into overspending. While a detailed budget
can be a great motivational tool to help you cut costs
and reach your savings goals, it’s not the only answer. As long as you pay
attention to the basics... make sure your needs are covered; manage your debts and savings; and avoid overspending, you'll be setting the groundwork
for a more secure financial future.