Creating a budget is the first crucial step in managing our finances. Suffice to say, it can be said that budgeting is the basic foundation of every financial plan. Some people said that budgeting is a dreary task. In fact, most of the time we often give excuses for doing budgeting, and in the end, we hardly stick to it according to plan. Now, let’s change our mindset about budgeting everyone.
Actually, learning how to budget is not at all difficult. It is all about time and effort, and whether you can truly commit to keeping track and sticking to it. Once you create a budget, you will know how much money you have and where it goes, then you will be able to strategically plan how to allocate those earnings or funds best. Here are seven easy ways to assist you to create and maintain a budget effectively.
1. Figure Out Your Financial Stand
If you don’t know where to start or which path to take, firstly, identify and figure out your current financial state and goals. For example, perhaps currently you are in debt, so now you will need to find ways or a system to help you learn how to balance your expenses, spending, and savings. Once you are able to understand and know where you stand and what financial goals to accomplish, you will then be able to execute an action or pick an option that leads you to set up your budget properly.
2. Identify and Record Your Earnings
The second step towards creating a budget is that you will need to record how much money is coming in monthly. If you have time to spare to do this task, you should record or track your earnings weekly, especially if you are among those who have multiple jobs or are doing side hustles. The easiest way is by listing out of all money coming in and of course, this includes the amount and how often you receive each earning.
Nevertheless, if you don’t have a regular amount of income, just simply work out an average amount to have a clear overview of your earning, and in this way, you are then able to see where and how your money comes in. This money could be from your income, government payment or benefit, retirement pension, investments, and others.
3. Always Record and Keep Track of Your Spending
It is vital to always record and keep track of your spending. Although most of us know where our money comes from, surely we also tend to neglect and sometimes are not as certain on where the money goes. Spending comprises everything that you spend your money on.
Besides keeping track manually, we advise that you also gather your spending information from your bank account or credit card statements, receipts, and bills. By tracking your monthly expenses, this will at least help you to get an accurate picture of where your money goes and sort your finances, as well as to get ahead in your financial management efficiently.
4. Get Started with the 50/30/20 Budget
What’s pleasing about this strategy is that it will give you space to cover present costs, pay off debts, and a room to save for future expenses. In order to do this, you need to split your earnings across these three major categories: 50% goes to your necessities or needs, 30% goes to your wants and 20% goes toward your financial future and savings.
Once your true and exact necessities such as groceries, transportation, utility bills, etc. are taken care of, then only you can fill in the rest of the categories in your budget.
5. Make Use of Budgeting Apps
We should be thankful that nowadays there are plenty of budgeting apps available right at your fingertips. Many of them are available free of charge and easily downloadable on your gadgets, including laptops, tablets, and smartphones. This will make managing your money a breeze, hassle-free, saves your time, and will make life a whole lot easier than using the traditional notebook and pen. Doesn’t that sound just fantastic?
With a budgeting app, you will be able to focus more on planning a budget and keep track of your spending from the comfort of your mobile gadgets!
6. Adjust Your Budget Monthly
Who says budgets are not adjustable? Every month is different and it all depends on the variables of a situation that you may need to face in your daily lives. Some months, you will need to budget for things like car or housing maintenance, back-to-school supplies for your kids, and other purposes. Meanwhile, in other months, you may need to save money for things like preparation for festive seasons, birthdays, and holidays. In other words, you should definitely adjust your budget each month since your monthly needs do change.
This strategy can assist you to have a better plan, without being stressed about how to prepare for those monthly expenses in the budget. Thus, don’t be afraid to adjust your budget. Do it often and do it wisely!
7. Do Budgets Together
For those who are married, you can have a family budgeting day once a month to keep track of family spending and expenses. Don’t make it too formal or a serious activity. You can put on a good playlist or even grab some snacks to help you and your life partner to have fun with the activity. Just sit down, discuss together and focus on what’s at hand. The goal is to ensure that both you and your spouse are on the same page with money and financial management. Hence, do set financial goals together such as savings, vacation, child education, and other goals.
Even for single folks, you can still do your budgeting with other people. Ask your close friend or a sibling to act as your accountability partner to remind and help you stick to your financial goals. Most importantly, do prioritise and turn your budget into financial goals that work for you and your lifestyle.
All in all, creating and maintaining a budget can give you a sense of control over your money despite different economic standings and which generation you fall into. Creating a budget doesn’t mean that there will be no more shopping, eating out with friends and families, and doing fun activities. Budgeting will actually allow you to create a spending plan, and make sure that you will have sufficient money for the things that you need and the things that are important to you.
You need to budget your finances in working toward a more financially sound future for yourself and your family. So, let’s start creating a simple budget today!
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