On A Budget: Seven Tips for Putting Together Your First Real Budget
by Stephanie Koathes Jan 28, 2019
A budget is a great way to monitor your money efficiently, curb unnecessary spending habits and meet your long and short term savings goals.
If you’re a budget newbie, making a budget can seem like a daunting task, but with the following tips you’ll get the hang of it in no time.
1. The first step to creating your budget is to know the spendable income that you have coming in every month. For those making a standard pay cheque knowing your total monthly income is easy. But for those who earn hourly, weekly or the amount varies from month to month like consultants and freelancers; this is a bit more difficult. Take the time, to calculate the total of all the incomes you have coming in.
2. Know what you have in the bank. Get a clear idea of how much money you already have in your various accounts, savings, checking, investment accounts, or any other financial instruments you use.
3. Calculate your expenses. Use your credit card statements, bank statements, bills, debt repayments, etc. to determine your average monthly expenses. Examine your expenditures and see where your money goes. This is will also help you to identify areas where you are possibly overspending.
4. When determining your expenses remember to factor in your irregular costs, such as homeowners’ insurance. These bills shouldn’t be surprise expenses. Instead, you should be squirreling away a little at a time to pay them.
5. What are you budgeting for? Write out your long term and short term savings goals.
6. Once you have an idea of your income, expenditure and spending habits, you can use the simple 50-20-30 rule of thumb when creating your budget. This means 50% of your income goes to necessities, 20% to long term savings, and 30% to lifestyle choices.
7. Make use of online budgeting tools or mobile apps to keep your new budget as streamlined and simple as possible.
Making a budget is simple; the hard part is sticking to it!
Sources: Bank of America, MoneyCrashers, Nerd Wallet
