When talking about budgeting, it is necessary to mention that just the word gives headaches to a lot of people. We tend to think that planning a budget includes making many sacrifices! But this is a total misconception! In reality, a budget doesn’t restrict freedom – it gives you more freedom than anything else! When you look at it, you realize that a budget is nothing but a plan for your money.
Another reason why people get intimidated and convince themselves that they can’t budget money is thinking that they need to learn how to use some special accounting software or hire a professional accountant. But none of that is true! In this text, you will find all the tips on how to budget money for beginners! Trust us, following these steps will enable you to even spend some money on an online casino if you like this type of game. Let’s have a look!
How Budgeting Helps You
Before we talk about how to budget money better, we first need to see what budget does for you! For starters, it gives you a clear picture of where your money goes every month. If you have some financial goals, budgeting will certainly help you achieve them. Maybe you are trying to save for a trip to Latin America? Are you thinking about buying a new car? Learn how to budget money and your dreams will become true before you know it! When you understand that budgeting is simply a tool to spend intentionally, you will have more freedom than before. Believe it or not, many people said that they suddenly found some extra money once they properly planned their budgets! That is simply fabulous, isn’t it?
Simple Ways to Budget Money
Define Your Financial Goals
Before you start creating a budget, you need to think why you want to do it! It is something that can help you understand where you want the money to go! Ask yourself: What do I want to achieve? Maybe you want to create a college fund for your kid? Or, enrich your home with a new furry family member? If you are living with your partner, you can ask her/him if they have some ideas on how to help budget money!
Determine Where The Money Goes
The clearer idea of your spending habits and expenses you have, the easier it will be to plan the budget! The best way to do this is to monitor the spending over a week or two, or even a month. You can track your spending manually or use a phone app to do it!
Setup Your Budget
Record The Income
Make sure to record how much money is coming in, when, and from where! If you don’t have a steady income, calculate the average you make per month. The easiest way to budget money is to make a list of all the money you receive and write down everything related to it.
Track The Expenses
Write down every single expense you have. Besides recording how much you spent, write also what you paid for and when. Some people record only regular expenses such as utility bills, rent, household costs, medical bills, etc. However, it is essential to track other unexpected expenses, too, even if you don’t have them every month.
See If You Can Put Some Money Aside
Yes, we know that this is easier said than done! However, as we all know, having some savings creates a safety net for potential unexpected expenses! Try to calculate how much of your income you can put aside and work towards achieving that goal.
Define A Spending Limit
After you cover the expenses and savings, you will probably have some money left. That money is for whatever you want, i.e., going to the cinema, eating out, hobbies, etc. However, it is recommended to make a plan of how you want to spend it, too, because that way, you can stay within the limit. Keep track of spending to always know how much you have left!
It may seem like a long road to come to the point of knowing how to budget money! However, keep in mind that by creating a realistic budget and more importantly, following it, you will gain control over your finances and create financial stability which will consequently enable you to have a lot of freedom! Are you budgeting? Do you have some tips you would like to share?