Millennials are currently dealing with levels of debt not previously seen in past generations. Yellowbrick created an infographic that illustrates just how bad the debt load is in America right now. Outside of debt consolidation, the next best thing people can do is control their spending. A number of methods are coming out including using automated financial tracking services, creating a budget, or altering payment methods.
Many services have come out over the years such as Mint or CashBase that are designed to automate the process of tracking spending and saving for financial goals. These have been popular among many people, but I have found that I don’t really learn much about my spending and it is a bit time consuming to track when spending cash. I’m sure for other people though, if enough time is dedicated to them, they can be very helpful.
Creating a budget seems to me like another new year’s resolution. A budget sounds like a good idea, and then a couple weeks later people find that they have only been tracking spending here and there or have given up all together. It takes a certain type of person who doesn’t mind maintaining a spreadsheet before bed every night.
The method I have used for years is to dedicate one evening a month, pay all my bills, and maintain a spreadsheet of all my bills. By paying all my bills in one day at the end of the month it is not very time consuming. I don’t use auto pay on anything. Paying my bills manually every month forces me to asses each bill and take a little time to make sure I am not overpaying something and look for ways to reduce my payments. Recently Motley Fool Answers did a podcast on automating bill pay, but I think that automated bill pay detaches the consumer from their spending. I put pretty much everything on a couple of credit cards. I always go through the charges on my statement to make sure I made the charges, and I review what I am spending money on. As I make my payments I enter them into my spreadsheet, which allows me to compare spending trends. Once my bills are paid I move money into savings. I set a minimum I want to transfer every month, but if I can transfer more I will.
My method works for me, but everyone is different. The important thing is that every family do something to track spending. With the current financial burden that many Americans face, budgeting is more important now than ever before.