We are struggling to maintain a steady budget, especially after a couple of unexpected years. With major financial losses due to the pandemic, everyone needs a bit of budgeting help in the new year and the years to come.
Creating a budget can help you save money, and reduce your existing debt and it can help you prepare for unexpected situations such as a global pandemic.
Our step-by-step budget plan will help you get your finances in order and have a more successful financial year.
Create a Budget
The first step in budget 101 is to create a budget. Most financial specialists recommend doing what is called a zero-budget. This means that your income and savings minus your expenses for one month will equal zero.
This makes budgeting very simple and helps you stay on top of your finances each month. Now, we aren’t saying to go spend all your income each month. Instead, the easiest way to make a budget is to focus on balancing your expenses, income and savings each month.
For example, you should prioritize all your necessary expenses like rent, food, utilities, phone payments, debt payments and other necessary expenses such as gas or transportation. After you have added all of those expenses together, subtract it from your monthly income. Whatever is left over after you subtract all necessary expenses from your income should ideally go into some sort of savings account.
This calculation can easily be accomplished with a simple budget template or with the help of a saving planner, both of which can be found online.
Stick to Your Budget
Creating a budget is the easy part, after that comes the hard part, which is actually sticking to the monthly budget you set for yourself. It is definitely easier said than done, so do not get frustrated with yourself if you don’t manage to stick to your budget for the first few months. It takes time to ease into a new budgeting routine, but here are a few tips that might help make things a little easier.
First, you should set up automatic payments for large and important monthly expenses, such as your car payments, debt payments or rent and utility payments. Setting up automatic payments takes money out of your account before you are able to spend it on other things you may not need and ensures you won’t have to pay any unexpected late fees that may also affect your budget. Automatic payments also help you get into a payment routine, which will help you get accustomed to your new budgeting plan.
Next, if you struggle to stay within your budget while doing groceries or buying other necessities from stores, you should try and pay with only cash. Paying in cash forces you to stick to a set amount since you will be unable to spend more than the amount you brought to the store with you.
To decide how much cash you should take, look at past grocery store purchases and average how much you usually spend a month. After that, decide on the amount of cash you will need to take to the store and be sure to stick to it unless it’s an emergency of course.
Work Towards a Goal
Another great way to help you stay on budget is to work towards a specific goal. This can be anything, from paying off your credit card debt to saving for your next big vacation. Having an incentive at the end of your budgeting journey will help motivate you to stick to your budget and work towards your financial goals.
To help you work towards your goals, you can set up a simple budget planner online that will track how close or how far you are to reaching your next goal.
It is always motivating to see your vacation funds increase or your debt slowly decrease as you stick to your budget month by month. Because of the inherent motivation working towards a goal provides, it is usually one of the best ways to budget and save money.
Have Emergency Funds
While constructing your simple budget, it is important to allocate funds for emergencies and unforeseen expenses. If we have learned anything from the last two years, it is that it is important to be prepared for anything, and that includes setting aside money every month in case of emergencies.
Some people will just use their savings as their emergency funds, but others will choose to make emergency funds a completely different category to their savings in order to keep things more organized and not dip into their savings unnecessarily.
If you decide to have your emergency funds separate from your savings, it is recommended that they be moved into your savings account at the end of the month if they are not used. This way you can keep them separate for the entire month, but safely tucked away in your savings at the end of the month before you are tempted to spend it on unnecessary things.
Use Budgeting Tools
One of the best resources when you are creating a budget, is budgeting tools. You can create an online budget on a budgeting website or download a budgeting app and keep up with your finances on the go. In addition to helping you create your budget, budgeting apps and websites can also give you tips on how to better use your planner money or the amount of money you input into the app.
You can do budget calculations for how much you should be saving based on how much you earn, which is around 15 percent of your total income and even get tips on how to start investing if you are over budget some months.
Some budgeting tools even allow you to communicate with financial specialists to get advice on how you can best accomplish your financial goals. Whether that is a short-term goal like how you can save more efficiently and in order to save for your next vacation, or if it is a long-term goal like how to best save for retirement.
Overall, getting serious about budgeting takes time but it is not impossible. With the help of comprehensive budgeting tools, motivational goals and your willingness to improve your financial situation, you will be well on your way to budgeting success.
By Admin –
