Budgeting your money successfully can completely change your life. When you have a proper budget in place, you can go from being in debt to saving money each month for the things you want and need. Here are ten tips to help you create and maintain an effective budget formula that will improve your life.
Track Your Spending and Income
The first step to making a budget in understanding your finances. This means tracking all the money that you are taking in and what you are spending it on. Take a month or two to track every penny, using an app to help you or just going over your bank statements each month to see where your money goes. Once you understand your finances, you can budget them more effectively.
Make a Budget
Divide your budget into categories, listing both fixed expenses and those that fluctuate. For example, make a category for rent, utilities, groceries and even one for entertainment. Project how much you will spend in each category based on the spending tracking that you did. Make sure your budget matches your income.
Make a savings plan
You should also plan to save money as well and make a category for savings while you are doing your budget. Saving money is one of the best things you can do in order to achieve your financial and lifestyle goals. Even if you can only afford to save a little, every penny counts!
Review and Adjust
After a month or two of following your budget, review it and reassess it. Change the numbers to be more realistic and reflect what you spent in the past months. You can also adjust the budget to reflect any life changes (a new job, a new apartment,etc.). Any major changes in your income or spending should be reflected in your budget.
Set Real Goals
No matter what you want to save your money for, you need to be realistic about what you can afford. Make sure the savings goals and spending goals that you put into your budget are ones you can really attain. You are only helping yourself!
Give Yourself New Goals
Once you reach your financial goals, don’t stop! Set new goals and keep saving and reaching for new financial achievements. Maybe you want to improve your credit score or save for a vacation- put these new goals into your plan and budget accordingly. You will be able to make it happen!
Make Your Budget Simple
While some people are great at saving and tracking every receipt to keep themselves on track, others just don’t have that kind of time. Try using the 50/20/30 plan instead. This means 50% of your income goes toward necessities (rents, utilities,etc.), 20% is for savings and 30% is for you to use at your discretion. Figure out what these numbers will be when plugged into your income and that is your budget for the month in each category. Simple budgeting can be best!
Use Helpful Tools
There are many financial tools out there that can help you budget, save and stay on track financially. Whether you set your bank account app to alert you when you are spending too much or if you just use a simple excel spreadsheet to track your budget, find a tool that works for you and use it! You may also need to use tools like a credit card or cash loans occasionally- don’t be afraid to do so! They are useful tools as well when used correctly.
Every now and then, you may get off your budget for whatever reason. Perhaps you lose your job, or you get hit with a larger bill. Things can happen but all you need to do is stay positive, reassess your financial situation and work to fix the problem. Budgets change and your financial situation will change- you just need to stay focused, stay motivated and go with the changes!
When you are successful in your budgeting and reach your financial goals, reward yourself. Celebrate your financial success and be proud of the accomplishments you made. Even if it means a tiny splurge in your budget, you deserve it!