Having a budget is extremely helpful when it comes to learning how to manage your money. But many people are at a loss when it comes to planning a budget.
Are you curious about how to set up a budget and how to stick to it? If you’ve never ventured into taking control of your money, keep reading to learn some first-class budgeting tips!
Why You Should Have a Budget
When you have money coming in, it’s nice to know exactly where it goes and how much you have leftover. When you spend more than have, that’s when the trouble starts!
Planning where your money goes when you get paid is important to stay on top of your bills and financial goals. Having a budget helps you clearly see how you’re spending your money and gives you options on how to spend or save it. Budgets are, in a sense, very freeing.
Without a budget, you could potentially dig yourself deeper into debt and financial trouble. When this happens you maybe want to get a payday loan alternative.
How to Set up a Budget
If you’ve never set up a budget before, the good thing is that it’s not that hard to get started! Here are some of the best tips for setting up a budget that works for you.
1. Write Down Your Monthly Income
Do you know how much money you make per month or per year?
Your monthly income is how much you make per month after taxes. This is the number you’ll be working with.
Knowing your monthly income will allow you to divide your money up properly. If you’re unsure what your income is, watch your paychecks for several weeks and record it. If your monthly income fluctuates, write down the lowest average number.
Next, write down your expenses. Your expenses are things that you pay for every month, such as rent or mortgage payments, car payments, loans, and so forth. These are expenses that are typically fixed, ones that are unlikely to change and will remain the same each month.
There are other expenses such as gas, utilities, groceries, personal products, cellphones, and the like. These expenses may vary each month, but it’s best to try and nail down a good range of what to expect so you know how much money will go to that category.
3. Budget for Fun
While it’s incredibly important to budget your normal expenses, it’s also wise to budget for things that you want or entertainment.
When people live above their means, this is usually where the trouble starts! Forgetting to pay bills or ignoring them and then spending money on other things is how financial trouble begins.
Although, when you budget for entertainment, you live within your means and you’re able to have fun at the same time. Write down things you enjoying doing like going to the movies, eating out, and so forth and set aside a small percentage of money for it each month.
The one area that many people forgo in their budget is saving. Only 23% of adults have money saved for emergencies. Having money for emergencies, even small ones can help you stay out of a financial pit.
If you don’t think you have enough money for savings, this is where a budget comes in handy. One of the ways that having a budget is helpful is that it shows you areas where you can tweak your budget to start putting money in your savings account.
Even if you can’t start saving right away, putting away a little each month, trains you to get into the habit of saving.
5. Find a Budget Tool
While most people long ago would get out a pad of paper and a pencil to do their budget, nowadays there are many online tools that will help you track your expenses and income electronically.
There are several apps and desktop programs that allow you to manage your budget with the click of a button. In addition, they have plenty of tools in the apps that allow you to customize your budget to you.
Not all budget electronic apps are made equal and some will have a monthly fee integrated into them. Be sure to find out if there’s a fee associated with the app and budget for it accordingly.
Having a budget is hard to stick to when you first start budgeting. In fact, it might feel a little weird having to say ‘no’ to yourself if something is not in your budget.
It’s normal to have trouble in the beginning but don’t let that stop you from trying and sticking to it the best you can.
It’s also normal to have to tweak your budget a few times if it doesn’t work. In fact, many people do change it over time if they pay off a debt or want to move money around to pay for other expenses. The most important thing to do is realize the having your budget around will aid you in managing your money well and save you from serious financial trouble.
Making a Budget
When you’re thinking about how to set up a budget, following those steps will help you get started. It’s ok to stumble a bit at first, but once you get the hang of it, you’ll wonder how you ever lived without it!
Do you want to learn more about how to take a handle on your finances? We’ve got all the information you need! Visit our page today to find more information!