Budgeting can feel like a strict diet for many. They get money and put it into savings or debt repayment, leaving little to live on. They feel deprived after a few weeks.

Simplifi is our partner to help you create a spending plan that works.

You can approach your spending plan with an open-minded mind and a willingness for technology to be incorporated. This will help you find the right plan. Here are some tips to help you get started.

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1. Get started with your income

A budget or spending plan that is effective starts with income and not expenses. While most people can spend unlimited amounts of money, income limits their ability to do so.

You need to know how much you earn in order to create a spending plan. This is especially important for people with lower incomes, but it's equally important for all. Your income will determine how much you spend, whether you make $1,200 per month or $12,000 each month.

Simplifi is a budgeting app that can recognize your monthly income. Many people experience minor income fluctuations from one month to the next. You may work less or more depending on the situation. These fluctuations shouldn't stop you from creating a spending plan that works. Your average monthly income can be used to build your spending plan.

Some people, particularly college students, may have variable incomes. They may only make a few hundred dollars each month during school year after earning $7,500 in summer earnings. People in this situation should save as much money as possible during their work seasons to cover their lifestyle costs for the remainder of the year.

This case study will focus on a young professional earning $3,200 per monthly from her W-2 job after 401(k), contributions, taxes and health insurance. She also earns an average $600 per month charging scooters. Her monthly average income is $3800

2. Fill in your Fixed Expenses

Fixed expenses, also known as bills, are expenses you have to pay every month. This category includes insurance, rent, cell phone bills, utilities, debt payments and memberships.

These expenses are stable from month to month so you can plan your spending around them. The following are the fixed expenses of the young professional:

• $650 - Rent for her half of an apartment
• $100 - Half the utilities (including Netflix subscriptions)
• Student loans: $428
• $379 - car loan
• $83 - Renters and car insurance
• $15 - Cell phone
• $35 - gym membership

Her monthly fixed expenses total $1,690. After subtracting these fixed expenses, there is $2,110 left over for other expenses.

These expenses are sometimes called "fixed", but they don't have to be fixed. These expenses can be cut down by switching to cheaper accommodations, downgrading the car or cancelling subscriptions.

Plan for expenses. These things might not be fixed, but you can plan for them!

3. Automate your Savings

A spending plan that is effective includes short-, medium-, and long term savings goals. Saving money for the future can help you make sure you have money available when you need it. Automating savings is one of the best ways to reach your savings goals. Automate savings by setting up automatic transfers between your primary checking account and online savings accounts that are designated for saving goals.

Simplifi, an app that helps you determine how much money to put aside for each major goal, is a great tool. Once you have the amount you need, you can schedule automatic transfers so you stay on track. These transfers can be scheduled the day after your paycheck arrives in your bank account.

This case study shows that the young professional has goals to save money for retirement, emergency, Coachella, a marriage, and snowboarding passes. She transfers the following funds to another account based on her goals.

• Roth IRA: $500 per month. This money is transferred into a Roth IRA hosted by a robo advisor.
• For emergencies, $400 per month
• $180 per month for Coachella expenses
• $150 per month on a wedding account
• Annual snowboarding passes: $80 per month

She has put $1,310 in various accounts. The young professional still has $800 after savings and fixed expenses.

4. Keep an eye on the leftovers

A good spending plan allows the planner to have a lot more freedom than the income restrictions. Simplifi's Spending Plan allows you to see how much money you have left, taking into consideration your income and bills. Many people wish to predict where each penny of their money will go. To manage money more precisely, they may use spreadsheets and traditional budgeting apps.

Others don't like to deal with specific categories. They want more flexibility. They may spend a lot of money on groceries one month, but they will eat takeout ten times the next month. They will eat out as much as they like, provided they stay on track.

Our case study shows that the young professional we are describing falls somewhere in between. Because she is aware of the dangers of falling into a takeout rut, she wants to be careful about her spending on eating out. She also likes to set aside a weekend budget for her spending to ensure that her weekends are well-planned.

She spends the following in each month:

• Take-out and restaurants: $57 (with a $90 budget).
• Get groceries for $318
• $290 for a weekend getaway with her sister (Venmo transaction).
• Gasoline: $96

She spent $761 on her $800 budget.

Cash envelopes are one of the best ways you can keep track of your spending. This solution isn't ideal in an age of digital spending.

Tracking spending apps can be an alternative to cash envelopes. Simplifi, for example, allows users to create watchlists in order to monitor their spending. You can monitor your monthly spending and set limits for a time. As users reach their spending limit, the app will alert them.

5. Implementing the Plan

If they are too complicated or unrealistic, even the best-laid plans may go wrong. Even a spending plan that appears effective on paper might be difficult to implement. You may lose track of a bill or overspend in another area if you aren't detail-oriented.

Cash flow management can be difficult even when you have a plan. Automating everything is my preferred method of managing cash flow. My automatic bill-pay and automated transfers are set up according to the day that my paychecks arrive in the bank. Anything I have left over I can spend. This type of automation is difficult to implement and may need to be adjusted when cash flows become tight.

They can use predictive reporting to help manage their money, even if they don't have all the automation. These predictions are being built into many budgeting apps. You can be reminded of your upcoming bills so that you don't spend too much the day before rent due.

Simplifi, for example, projects your account balance up to 30 days. It forecasts your bills and helps you save money. It then reports on how much money you have available to spend today, tomorrow and the remainder of the month. You'll be notified ahead of time if your bank account will drop. This is especially important to keep track of during low-income months, when you don’t have as much disposable income.

Last Thoughts

As your life changes, spending plans will need to change. You may have half a dozen roommates when you are young. As your income grows, you might reduce the number of roommates. You may find that daycare bills consume most of your discretionary spending when you have children.

A good spending plan does not have to be perfect. You can keep a budget by tracking your expenses and making adjustments.

Simplifi is a great app that will help you make a budget and then modify it as needed. Simplifi is a free and simple platform with powerful insights and budgeting tools.

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