It doesn’t matter what age or stage you are in – budgeting is one of the best tools for achieving your goals. A budget is a plan for how much money you expect to receive and how you plan to spend it.
Spend less money
Start by listing everything you’ve spent money on in the last three months. It may take a little longer, but listing the revenue and expenses for the last month alone will not show you the whole picture. You may forget about transactions that occur on a quarterly basis, such as changing your car oil, paying down a loan on installments, or a payroll bonus.
Rule 50/30/20 .
This rule divides ordinary expenses into three categories by fixed percentages. Based on income, basic costs (utilities, food and rent) account for 50% of total costs. Expenditure that is not vital (cable, internet, mobile phone) makes up 30% of the budget, and future goals (payments on loans, savings, pension funds) form the rest of 20%.
Fixed and variable costs.
This method divides the budget into two categories – fixed against variable costs. You can only reduce fixed payments such as car insurance or mortgage payments, but the cost of eating out and entertaining falls within the personal discretion, which can be eliminated if necessary.
Budget limited to the bare minimum.
This budget is based on the lowest income possible. If you are self-employed or working on a commission, this plan will be most appropriate. Create a plan that is based on what you need to survive. The remaining money is treated as income.
Find a method to track your budget
After calculating what your income is and how much money you will spend and selecting a budget plan that is right for you, it’s time to decide how you will track it each month:
- mobile applications and web-based budget tracking platforms
- notebook and pen for recording income and expenses
You may need to test several different online tools or spreadsheet templates, but once you’ve found the right one, stick to it.