Unless you have a financial plan like budgeting your money, you are basically inviting unimportant debt in your life, and making it nearly impossible to put aside a fraction of your money. If you don’t budget, you lose control of your expenses and cannot even figure out where your money went. The following tips on budgeting your money will assist you to plan where your money should go so that you can control your spending.
Budget Tip 1- Make a budget each time you get salary. For most individuals, this is made once every 2 weeks. Sometimes it’s done on a weekly basis, sometimes monthly. Whichever way it must be a regular and standard interval and it is the ideal time to decide on how you are going to expend your money. Always make it your rule that you should not spend any of your money until you have worked out your budget plan.
Budget Tip 2- Make your personal list of the things you are obliged to pay until your next paycheck, like the following:
Mortgage/Rent
Utilities
Vehicle maintenance, payments and maintenance (e.g. tire rotations, oil changes)
Debt (doctor’s bills, credit card, student loans)
Gas
Tuition and school supplies
Groceries/Food
Health insurance
Budget Tip 3- Budgeting your money means estimating how much you will need to spend for each item and take note of that amount on your list. You can choose to pay a fraction of anything that is not due until your next paycheck. Example, if your house rent is $500 due on July 1, you just got paid $800 on June 12, and the next paycheck on June 26 will be $800, it is best if you set aside $300 from this paycheck for the rent so that you’ll only need to get $200 on the next paycheck.
Budget Tip 4- Sum up all the amounts (we’ll call this your regular expenses) and then subtract it from the paycheck amount. Is the result a negative digit? Then it means you’re living way beyond your earnings. If there is some leftover money, you can split that amount up into a few groups such as the following:
Flex Money- It needs to be at least 10-20% of the regular expenses. This can be use if something you are obliged to pay seems to be somewhat higher than you expected it to be. This commonly happens with your utilities or with gas price that abruptly goes up or if you had some unforeseen car problem.
Savings- If possible, savings should be at least 10% of your income, 15% will be pretty good. Set aside enough savings in case you need emergency funds which can amount to 3-5 times your typical expenses, then you can start saving up for an investment.
Spending money- This refers to whatever that is left after you subtract your flex money and the savings. This is what you can spend on stuffs like eating out, clothes, gifts, movies and any recreational activities basically.
Budget Tip 5- Set aside everything except the spending money. Leaving everything in your bank account (except for the spending money) is the best way you can do this. Withdraw all your spending money and you should leave your credit cards and debit cards at your home.
Make use of this cash for something you really want but you also have to make sure that this amount can still last until the next salary. You may not want to bring it all at once, but having cash on hand will help you in keeping track of the fun money than merely using your card.
Budgeting your money will not just help you to manage your income well, but it will help you to improve your financial status, and go on to enjoy a better quality of living.