Money Monday: Budgeting 101

                                         

Budgeting your personal finances can seem like a daunting task. But it is quite simple to organize and secure financial success. These steps below are the best way to start taking control of your monetary life.

What is a budget?

Quite simply it is a set income and expenditure for a specific period of time. It allows you to estimate the money coming in and control the money going out. Budgets are extremely unique to each person/situation.

Where to start

You won’t be able to create the perfect budget on the first try. For a month write down every time you spend money and where it goes. Also write down every time income comes in (this is very easy if you have a recurring paycheck). Start asking yourself what are your priorities and/or big expenses.

Goal setting

Before you budget, you have set goals for yourself. Is it saving enough for vacation, getting out of debt, or having more fun money? Write these numbers down on the top of your budget.

Cutting back

Now that you have a goal, you can look at where to save money. For instance if your goal is to buy a new phone and you notice you spend $20 on coffee every week, a reasonable cut would be limiting yourself to $10 a week in coffee and putting the other $10 in the new phone goal.

50-30-20

Now you can start getting to the bulk of the budget. The rule of thumb for financial success is 50% of your income goes to necessities (i.e. house, food, car, bills), 30% goes to entertainment (i.e. restaurants, vacations, movies, etc.) and 20% goes to savings. For instance, if I make $100 a week, $50 would be spent on gas, food, and bills, $30 would be shopping or going out money, and $20 would go into my savings account.

Track your progress

Always update and check your budget every 3 days. Write down any expenses and subtract from the budgeted sum of money. There will be weeks you stick to your budgets and weeks you won’t. This is okay. The purpose of a budget is for long term financial success so don’t sweat unexpected expenses too much.

Do you have any creative ways to budget? What are ways that you stay on track with finances? Comment below and you could be featured in an upcoming post!