There are many expenses that come with a new job, a new city, or a new life and it can be difficult to plan your budget because of these. Fortunately, there are many simple things you can do to get your budget in order so you don’t go over budget. Follow the seven tips below for help planning your budget better and getting a grip on your finances.
1) Keep Track Of All Income And Expenses
The first step to a better budget is keeping track of your income and expenses. This doesn’t have to be difficult. Just take out a sheet of paper or open a document on your computer and break down all of the details, including what you spend money on, what you owe people, when bills are due, etc. Writing it down helps you get it all straight in your head. Don’t forget about your credit card expenses if you use one. If you do use this option when paying for something, look for credit cards for fair credit with low-interest rates so you can save money on your purchases. Doing this also allows you to see where you can cut back on your spending and where you may need to save more money.
2) Create A Monthly Budget
Creating a monthly budget is another great way to get your finances in order. This entails creating a budget for each month and sticking to it. This can be difficult, but it’s a good way to stay organized and on track. You should include all of your expenses in your monthly budget, as well as your income. This will help you see where you need to cut back and where you can save money.
You can set a monthly budget by following the 50-30-20 rule. If you haven’t heard of this rule, it’s pretty helpful. It works like this: 50% goes towards whatever necessities are available (food, bills, etc), 30% is for fun and 20% is for savings. You can adjust these percentages to fit your needs or what you think is best, but it’s a good way to stay on track with your budget. The 50% portion can be tough for some people so it’s up to you to decide how much of the 50% goes towards essentials and how much should go to fun. It may take several tries to get this right, but this rule is a helpful guideline.
3) Look Ahead
One of the best things you can do to help plan your budget is to look ahead. This means planning for future expenses, such as holidays, birthdays, and other events. If you know these are coming up, you can start saving money now so you’re not caught off guard later on. It’s also helpful to plan for unexpected expenses. For example, if your car breaks down, you may be able to fix it with savings or get a used car instead of buying a new one. Doing this prevents you from having to go into debt or use your credit card.
4) Prioritize Goals
Another helpful way to plan your budget is to prioritize your goals. What are you working towards? What’s most important to you? This will help you determine where you should be spending your money. If saving for a down payment on a house is a priority, then you may need to cut back on other expenses and save more money. If traveling is a priority, then you may need to find ways to make more money. Having goals in mind helps you stay focused and motivated when it comes to your budget.
5) Use Apps And Software
There are many helpful apps and software programs designed to help you plan your budget. These programs make it easy to track your expenses and income. They can also help you create budgets for each month and see how you’re doing in terms of your overall finances. Some popular programs include Mint, You Need A Budget, and Personal Capital. These are all great options to help get your finances in order. Also, don’t forget about the best budgeting apps out there that can help you save money on your everyday purchases.
6) Automate Payments
One of the best ways to help plan for your budget is to automate payments. This means signing up for services that automatically take money from you each month, such as a gym membership or even Netflix if that’s part of your entertainment budget. You can also opt to have your bills automatically paid each month. This eliminates the need to worry about paying bills on time and keeps you organized. It’s a great way to make sure your budget is always on track.
7) Pay Off Your Debts
The final way you can help plan your budget is by paying off debts. This includes credit card debt, debts on loans, and any other kind of debt you need to pay off. You should prioritize which debt needs to be paid first and make a game plan for how long it will take you to pay your debt. By doing this, you can start saving more money each month. It also helps to have a plan for how you’re going to stay motivated during the process. Reward yourself each time you pay off a debt, or set up bi-weekly payments if that will help motivate you to stick with your plan. If you have debts, now is the time to work towards paying them off. The sooner you pay your debts, the better it is for your financial future.
With the many different strategies for planning your budget, it’s possible to find a system that works best for you. Whether you want an app or software program designed to help manage your finances and create budgets, or if you prefer not to use any of these tools and instead plan on paper with pen-and-paper systems, there are plenty of ways available to ensure you’re living within your means. The key is finding what works best for YOU! Hopefully, the tips provided in this article will help get you started on the right path. Good luck!
About the Author
Zeke Gavin is a freelance financial planner who aims to educate the younger generation and equip them with fundamental financial knowledge to help them make smart decisions on where to invest their money.