So, you’ve signed up to 22seven, linked your accounts, and have your most recent transactions neatly categorised in the app. Now what? Well, now would be a good time to start budgeting. 

Budgeting with 22seven is extraordinarily easy. Once you’ve linked your accounts to the app, we’ll automatically create a budget for you based on your previous spending. This is a good starting point for budgeting beginners, but if you really want to start your journey to personal financial freedom, you should look to create a budget for yourself that meets your particular needs, wants, and goals.

A monthly budget helps you track your spending more effectively, so that you can see exactly where your money is going. You’ll be able to see any overspending and learn to keep it in check. With 22seven, you can use your own personal data to get greater insight into your financial life, which will help you change spending behaviours that can be damaging to you, your future self, and those you support. Eventually, you’ll find some extra cash here or there that you can use to save for things you need or want in the future.

It might be a painful process as the reality check can hit you hard. However, having a budget is a healthier option than being in denial over your financial state. It’s not about being controlled by money. It’s about taking back control (and, of course, being less afraid of your bank balance every month).

We often get asked how one can improve their budgeting. This can be a difficult question to answer because there isn’t one right way to budget. There’re many different kinds of budgeting methods you can use. Your needs, wants, and goals may not be the same as someone else’s. Your debt obligations might be greater than the next person’s.

Normally, the first step is to start with your monthly income. How much money do you have available to work with every month?

Then, calculate your total monthly expenses and work out if your spending tends to exceed what you’re earning month to month. Ideally, you want your Money In to be greater than your Money Out so that you can start to grow your net worth.

You should also have an idea of what your future financial goals are. How much are you setting aside for future you? Are you saving/investing enough to meet your financial goals? It’s important that you consider what you may need 5, 10, or 20 years down the line and how you can pay yourself first before you start your monthly spending.

If you have debt you need to pay off, how much are you paying back every month? Reducing the interest you are paying on debt is a good starting point when trying to improve your financial state. (You can read some stories about how 22seven customers have used the app to eliminate their debt here and here.)

Once you’re able to accurately compare your Money In with your Money Out, continue to track your spending and saving over time.  Be diligent about it! By tracking your monthly expenses, you’ll see what you’re spending the most on every month. Identify problem areas in your spending and you can find some extra cash each month by reducing spending in those non-essential areas.

The most important thing to remember is that a good budget needs to be realistic. No one likes to see themselves missing their targets over and over again. You don’t want to set yourself up to fail, but you don’t want your budgeting to remove all sense of fun from your life either. However, you can make small changes bit by bit which add up to much bigger changes as time goes by. Success, not just in a financial sense, is achieved through this compounding effect.

(If you’re looking for tips on how you can get better at budgeting and reducing your spending, we have a few articles that can help you out.

Good budgeting is a habit that needs to be nurtured over time. Our goal at 22seven is to make this process as smooth as possible. No more collecting mountains of slips or creating complicated spreadsheets! With less fuss, we make budgeting less scary and more empowering for you.

Want to start taking back control of your finances? Sign-up to 22seven, create a budget and make some magic happen. In Part 2, we’ll talk about one popular method you can use to create your monthly budget.