Make budgeting as painless as possible

Some simple guidelines help keep you on track

Budgeting is a pain. But what’s more painful is a bill you can’t pay, debt that costs a fortune or not having enough money to retire.

Fortunately, you can have a working budget without watching every penny. Automation, technology and a few guidelines can help.

The following approach works best if you have reasonably steady income that comfortably exceeds your basic expenses. If your income isn’t steady or doesn’t cover much more than the basics, you may need to track your spending more closely.

Also, no budget in the world can fix a true income shortfall, where there’s not enough coming in to cover basic bills. If that’s the case, you need more income, fewer expenses or outside help. One place to start your search for aid is 211.org, which provides links to charitable and government resources in many communities.

Otherwise, you can craft a spending plan with the following steps.

Start with must-haves

Must-have costs include housing, utilities, food, transportation, insurance, minimum debt payments and child care that allows you to work. Using the 50/30/20 budget, these costs ideally would consume no more than 50 percent of your aftertax income. That leaves 30 percent for wants and 20 percent for savings and extra debt payments.

A budgeting app or your last few credit card and bank statements can help you determine your must-have costs. The more these expenses exceed that 50 percent mark, the harder you may find it to make ends meet. For now, you can compensate by reducing what you spend on wants. Eventually, you can look for ways to reduce some basic expenses, boost your income or both.

“After tax,” by the way, means your income minus the taxes you pay. If other expenses are deducted from your paycheck, such as health insurance premiums or 401(k) contributions, add those amounts to your take-home pay to determine your after-tax income.

If you don’t have a steady job or are self-employed, forecasting your after-tax income can be tougher.

You can use a previous year’s tax return or make an educated guess about the minimum income you expect to make this year. A withholding calculator can help you determine what you’re likely to have left after taxes.

Automate what you can

Automatic transfers can put many financial tasks on autopilot, reducing the effort needed to achieve goals. If you don’t automate anything else, automate your retirement savings to ensure you’re saving consistently.

Also consider saving money in separate accounts — often called “savings buckets” — to cover big, non-monthly expenses such as insurance premiums, vacations and car repairs. Online banks typically allow you to set up multiple savings accounts without requiring minimum balances or charging fees.

Manage what’s left

Return to your after-tax monthly income figure. Subtract must-have expenses, contributions to retirement and savings accounts, and any extra debt payments you plan to make consistently. What’s left is your spending money for the month.

Check your balance every few days or set up alerts to let you know when you’re approaching your spending limit for the month. To protect your credit score, make payments periodically throughout the month so your balance stays low compared to your credit limit.

Your budget won’t be perfect and you’ll have to make adjustments but at least you, and your money, will be headed in the right direction.