If you think budgeting is an excruciating activity that involves restricting your spending and cutting out all the good things in life, you have got it wrong! It is actually about understanding how much money you have and planning how to allocate them in the best possible way. It is a huge step in realizing your financial goals in the long term.
Budgeting can be done for any amount of figure. Be it a five-figure paycheck or small salary, you need to budget to know where your money is going and where you want to be at a certain time. Here’s a list of a few things you can follow to get your budgeting right.
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Budget Every Month
Make it a routine to budget at the end of every month on how you want to spend money the next month. A good rule to follow is the 50/30/20 budget rule wherein you use 50 percent of your budget for your needs like rent, utilities, etc, 30 percent of the budget on your wants like a new dress, vacuum cleaner, etc, and save the remaining 20 percent. You can form one budget template and add what you want to it every month.
Keep a Record of your Income and Expenses
This will play a crucial role in your budgeting. Write down in a clear statement of what you are spending on will not only create a system for budgeting for you but may also point out some unnecessary repeat expenses that you can do without. Once you have realized these places wherein you are losing money, use corrective measures. For example, if your electricity bills are high, investing in energy-saving products will be helpful to curb the costs.
Set Realistic Budgeting Goals
Of course, you want to save a lot of money for the dream car you are thinking of buying. However, if your income is slow, it’s better to set easier and realistic goals. Be practical in your budgeting rather than extreme. Goals intended on improving a skill by investing in it so it improves your income through good work is more doable. Instead of cutting down the cost of food groceries, it’s better to be cutting down your expenses by eating outside frequently.
Put Aside Extra Funds
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Accidents or unexpected situations can take place at any time. It could be a medical emergency or a leakage in your roof that needs to be fixed. If you are not prepared, it will completely put you off your budget and discourage you more. Other than just funds needed for emergency purposes, you may also come across small unexpected expenses that you have not listed or had forgotten to list.
Give Yourself Some time
Maybe the results of budgeting may show immediately or may not. The important thing is to be persistent and try to stick to your budgeting plan. There will be times where you will make a mistake and end up spending more than you had planned. Relax and don’t beat yourself to it. Be kind to yourself and remember to treat yourself well. Which reminds us, budgeting doesn’t mean not going out for coffee with friends, maybe just a tweak in the location from a pricy one to a more economical one will do.
The road to budgeting requires discipline. It could be hard but the result will surely make your efforts worth it.
