We could all use some extra money in our pockets! Particularly in times like these when inflation is high, a little money can go a long way. However, knowing how to budget your money can be challenging. With unexpected expenses that may come up throughout the month paired with constant bills, it can all become too much very quickly if you don’t have your finger on the pulse! Luckily, plenty of budgeting tips can help you save smarter and effectively budget your money to eliminate stress and build savings.
Break Down Your Spending
Before making your budget, you need to figure out where your money is going! First, write down how much you make each month and how much you spend on fixed costs (like rent, electricity, car payments, etc.). Then, try to figure out how much you spend on groceries, and then, of course, how much you spend on the things you “want” like going out to eat, getting a drink with friends, or shopping. Once you see how much you make and subtract how much goes towards necessities, you’ll see what’s leftover. Then you can better evaluate what you spend most of your money on and where you can cut back on things that aren’t necessities.
Try the 50/30/20 Rule
One helpful way to break down your spending is by applying the 50/30/20 rule. 50% of your monthly income should go towards your needs. This includes:
- Debt payment
30% of your monthly income should go towards your wants — things that are not essential to living. This could include going out to eat with friends or going shopping. Lastly, 20% of your monthly pay should go into savings! By breaking it down, you can budget and understand how much is “too much” to spend in one category.
Automate Your Savings
Most bank accounts have an option where you can automatically put a percentage of your paycheck into savings. By doing that, you’re ensuring you will save the money without seeing it leave your account. By automating your savings, you can rest assured knowing you’re saving the money rather than being tempted to skip out and use it on non-essentials.
Use an Online Budget Tool
It can seem overwhelming to break down your spending into categories and keep track of it monthly. Luckily, there are plenty of online budgeting tools that can take some of the work off of your end! Many tools even have apps to use on mobile devices so you can keep track of your budget whenever and wherever. There are many different apps available, so you can find the one that best fits your budgeting style and goals. Some helpful budgeting apps include:
Separate Your Accounts
Separating your accounts can help you keep track of your money and stay within your budget. For instance, you could have a separate account for your “fun” spending. You can’t spend more than what’s in it; once it’s gone, it’s gone. This can keep you from overspending! On the other hand, you could have a separate account for your fixed expenses like rent. That way, you can ensure you have enough money to pay for your essentials, and what’s left over can go towards savings and non-essentials.
Budgeting can seem like a challenging task to tackle. It’s also important to remember that getting used to a budget takes some time, and each month may welcome unexpected expenses! However, following these budgeting tips can make budgeting easy and help you save more money.
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