Budgeting allows you to create a plan for how to use your money. It's a way to make sure you will always have enough money for the things you need and the things that are important to you. It's balancing your income with your spending. If you don't balance and spend more than you make, you will have a problem.
According to a study by U.S Bank, 41% of Americans have a budget. This means the vast majority does not have one. I think the numbers are this low because most people don't know how to make one or think it's too complicated. Here's some simple and easy ways to create a budget that will allow you to take control of your finances and achieve your goals.
First thing we need to do is find out why we're doing this in the first place. Set some goals for yourself. For example, I'm planning two international trips for the end of the year and i need to make sure i have enough money to do that. My goals is to have ___ amount of money saved specifically for that. You can create as many goals as you want, the key is to be realistic.
Then it's important to find out what you're already spending your money on. Almost all banks have some type of digital feature where you have access to previous bank statements or even where they give you a spending summary of the previous year. If you have access to those tools, use them! They make things so much easier. If you don't, i recommend printing the your last two credit card and checking account statements and see where all your money is going. From there, highlight the things that were necessary purchases, and circle the ones that weren't. When I did this, I was so shocked to see how much money I was spending on things that weren't important and could have been avoided. This step is crucial for the next one.
Next step is developing the budget. Write down all the non-negotiable expenses that you have for the following month. These are your rent, car, cable, electric, and gas bills. Then write down how much you want to spend on your negotiable expenses. Negotiable expenses include: nail, lashes, hair and eyebrow appointments, happy hours, groceries, eating out, Starbucks (big one for me), shopping, and any thing else that is important for you. We aren't cutting these things off, just deciding realistically how much money we should be spending in these areas monthly.
Once that's done, take a look at the total amount of money you need to have each month. Then compare it to how much you make each month. If the income is less than the spending or exactly the same as the spending then you need to decide for yourself what your going to cut down. You should also think about how important it is to achieve the goals you set earlier. If the income is greater, than you can begin to see how much money monthly you could save and set a timeline on how long it will take for you to reach your goals. And adjust accordingly. You can save as much or as little as you want. If at the end of everything you realize you need more money, think of ways to invest the money you already have or maybe consider getting a new job.
Love your posts!