Budgeting… If you do it, you get high fives. If you don’t, you probably are wasting money!
Some people find budgeting a daunting task, and some people find it reasonably easy to do in their day to day lives. However, whether you’re on the negative or positive side of budgeting, the reality is we have to do it. Unless, of course, you have all the money in the world, and you don’t have to worry about expenses, which is probably unlikely.
So what is budgeting exactly? We can simply put it as a way to plan on how you will be spending your money. A budget can help you see how much money you have and how much of it you can spend on certain things. Making a budget may seem a bit daunting at first, but it really doesn’t have to be complicated. We’re here to help you create this simple, achievable budget plan that you can incorporate into your everyday life in no time!
Know Your Income
The first thing you have to do in your budget pan is to know how much money you make in a month. Ideally, a monthly budget is an excellent way to start, especially since it’s typical to have a monthly income. To start, know your monthly income, and we can move on to the next step from here.
List and Group Your Expenses
The next important thing to do is to list down all of your expenses and separate them into groups. Usually, you can group them into categories such as Utilities, Mortgage, Food, Rent, Car or Travel, Leisure & Savings. Having more transparent groups or categories for your expenses will give you a more detailed and bigger picture of where your money is going as well as knowing your highest costs. Grouping your costs can also help determine your fixed and movable expenses, which we will work on in our next step.
Allocate Your Money
After listing and grouping your expenses, you now have a clearer picture of how much money you actually spend on each group. This time, you can further assess that and see which categories are worth cutting back on, keeping the same, or adding to. Allocating your money can be as easy as using the 50 – 30 -20 – rule. You distribute 50% of your money to your utilities, food, rent, mortgage, car, or travel expenses, 30% on your leisure expenses, and 20% on your savings. You can mix up and allocate your money based on what’s comfortable for you, and most especially based on your lifestyle and needs.
Implementing Your Budget
Now planning and making your budget is one thing, and implementing it in your daily life is another. There are various budgeting tools out there that you can try, like those budget apps that you can download on your phone, so it’s easy to input expenses on the go.
You can also stick to pen and paper if you’d like to keep a budgeting notebook. Set specific days of the month that you can call a personal admin day where you’ll sit down and look over your monthly expenses.
You can also create specific budgets for big purchases like a car or wedding.
At the end of the day, the critical thing to remember is that we are all different, and there is no one size fits all rue in implementing a personal budget. It’s a trial and error process; what’s important is you do what works for you.