Thinking of Starting A Monthly Budget? Here Are Some Helpful Tips!
Budgeting is something we learn about from a young age, and we do not realize the important role it’s going to play until we have to juggle our own money. This means prioritizing and deciding what to spend on with the limited amount that we have in our bank account. In this case, a zero-sum game is inevitable considering one gain will lead to one loss, no matter what. To help you out and make sure your earnings are properly divided among your financial responsibilities, we are here to help you out with these tips:
Create a budget plan in five steps:
1. Calculate Your Net Income
With your total monthly salary, a certain amount is deducted to go into your savings, health, or life insurance, and monthly bills — that’s a given. Once these deductions have been made, only then can you have your proper disposable income — an exact amount with which you have to work with for the month.
2. Select A Budget Plan
You should have a plan that is considerate of all your needs as well as your wants. However, never forget about setting aside a couple of bucks to cover for an emergency or future fund because a safety net is always a good option.
3. Keep Records
In order to find out the performance of your budget plan and whether or not you are properly planning it, you must record it. For this purpose, you can either use a simple notebook or use online budgeting and saving tools.
4. Add Automation
By automating your saving, you’ll be able to allocate the money for whatever purpose without any kind of major issues. This can be achieved if you have an accountability partner or an online support group as they will make sure you are held accountable for your choices and do not add damage to the constructed budget.
5. Make Appropriate Adjustments
Your budget plan is not written in stone — this means that over time, your income, expenses, and priorities can face changes which is why it is important to take these differences under considerations. By keeping them in mind, you can adjust your budget so it suits you more accurately and is, therefore, more helpful.
If this is your first time setting a monthly budget, you’ll want to accomplish it with as fewer chances of complications as possible. In case you encounter problems, you can make use of the 50/30/20 budget. In this popular concept, a specific percentage of your salary is allotted to a specific expense in your life. In simpler words, this plan revolves around the concept that 50% of your earnings are used to satisfy your needs, 30% to satisfy your wants and lastly, 20% is kept for savings or debt repayment. If this is followed consistently, the person will be able to save enough, properly satiate their wants, and have enough for their needs. Therefore, people who use this concept might become more comfortable in their day-to-day monetary dealings. Here are the three aspects of the 50/30/20 budget:
a. The Needs
This 50% includes your groceries, transportation, housing, and other such essentials. There will be situations where these necessities surpass the 50% mark. You shouldn’t worry in those cases as to fix it, you simply have to dip into the “wants” portion of your budget. However, if the case is opposite with your necessities making less than 50%, you need to revisit all your expenses in order to be sure.
b. The Wants
Categorizing your wants and needs can sometimes be confusing but the main aspect to consider is that needs are those things that are essential for your life. However, this decision is dependent upon your priorities. Even then, it should be noted that your budget shouldn’t be too austere as some wiggle room is okay to reward yourself for your hard work.
c. The Savings
Putting a small amount of money every month for any unexpected events is always a smart move because if something occurs that requires emergency cash, you won’t be dependent on others for it. The steps you take must be considerate of the bigger picture.
Having a proper budget can help you in the long run. It can keep you from overspending while also making sure you reach the goals that you have set for yourself. The only way to make sure you achieve this is by remaining consistent. You can do this!
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