Budgeting Made Easy: 5 Simple Tips to Save Money
How well do you keep track of your spending? Are you putting some money into savings each month, or are you living paycheck-to-paycheck? Are you paying more than you can afford on your rent or mortgage?
Financial strain can cause so many of life’s issues, and most of the time, it can be avoided or better managed. So, how can you reduce the financial strain in your life and stay ahead of the ball?
Well, Budget Bee may have the answer for you. This week, Budget Bee has some great tips for you to set and track your budget, allowing you to live with more financial freedom.
1. Before you start your budget, you should understand your income.
Your income is the total amount of money you have going into your account each month. To calculate your income, add up all the earnings, proceeds, and profits you have and average it out over a month. For many, it will likely be your wage from your employer, but it can also include:
– Tips and gratuity
– Special allowances like a work car, travel, clothing, and laundry from your employer
– Generated interest from your bank accounts
– Dividends or other income from your investments
– Bonuses or overtime benefits
– A pension or welfare payout
– Rent from an investment property
It’s helpful if it’s consistent, and you’ll need to plan ahead a little more if it’s not. And keep in mind that you need to use the after-tax figures.
So, start collecting as many bills, bank statements or other documents as possible and write down everything you have coming into your account. This process should help you find your expenses too, which will come in handy later.
When you add all these amounts together, you’ll have the income you can budget for. And a great tip from Budget Bee is to use a month by month timeframe.
So, now you have a dollar figure for your income; what’s next?
2. Follow the 50, 30, 20 rule.
Budgeters have been using this tried-and-true method for years, breaking down your budget into needs, wants, and savings.
The 50, 30, 20 rule works like this:
1) Gather all your bills, receipts, bank statements and any other helpful documents that you can find.
2) Write down your expenses for each day, week, month, or year. Don’t just rely on the paperwork – you should try to be as thorough as possible!
3) Next, separate everything into either ‘must have’ or ‘want’. ‘Must haves’ are things you need to live, like accommodation, car payments, groceries, bills, and minimum debt repayments. ‘Wants’ are things you could do without for a few months if you had to, like new clothes, haircuts, furniture, and streaming services.
4) Now, add up the two separate ‘buckets’ and compare them to your total income. 50% of your income should be going towards things you need, 30% should be going to anything you want, and the remaining 20% can be set aside for extra debt repayments to get ahead or put aside as savings.
From here, you’ll probably need to make some adjustments. You may need to look closely at what you consider a need-to-have, or maybe cut down on some things that you feel are a luxury. Use the 50, 30, 20 rule as a guide for breaking down your budget, and try to adjust accordingly.
So, you have all the information you need and an idea of what to change. Where do you start?
3. Make your budget realistic.
Creating your budget is relatively easy once you have all the information at your fingertips. We even have a handy calculator on our website that you can find here, where we’ve done most of the work for you! Don’t be disheartened if it’s not what you were hoping for; there are plenty of ways to improve your spending and set a smart budget.
It might be tempting to set a tight budget so that you can hit that saving goal as early as possible. But you may be setting yourself up for failure if you don’t allow for some flexibility.
A mistake many people make when setting a budget is expecting too much. Don’t forget to build a safety net for emergencies. Try to be lenient with yourself and make allowances for fun, leisure, and a little luxury. You don’t want to let a moment of weakness completely blow out your budget, so plan for it.
But what if you can’t fit all your necessities and desires into your budget? What do you do?
4. Cut costs without sacrificing your quality of life.
If you can’t increase your income and your expenses are too high, there are several ways to cut costs. You can always downsize your accommodation, order less Uber Eats, or cut back on holidays to save money. But cutting back doesn’t necessarily mean reducing your quality of life.
Budget Bee has some easy tips to tighten the purse strings without feeling like you’re cutting back:
– Before shopping for groceries, write a shopping list for everything you’ll need. Then, shop just after eating dinner to avoid impulse buys.
– Take lunch to work more often; eating out can be expensive and often unhealthy.
– Try a different way to get from A to B. If it works for you, try walking, it’s free and great exercise. Riding a bicycle, catching the bus, or carpooling are other cost-effective options to save a few dollars.
– Entertain guests at home rather than going out to meet people; you can still be social and enjoy a bit of a break without the big price tag of a night out.
So, you have a comprehensive, realistic, and personalised budget that should work for you. Now you need to follow through and stick to it.
5. Share your budget with others to keep yourself accountable.
It’s important to consistently reflect on your budget to keep on track and update it for any changes in your expenses or income. Having a copy on the fridge is one great way to keep your budget front and centre of your mind, or consider sharing it with a trusted friend or family member.
It’s a good idea to reflect on your budget once a week and see where you could make improvements. And don’t forget to reward yourself for your successes; it can make saving feel like less of a chore.
Regardless of how you do it, accountability is the key to a successful budget!
So, that’s the financial buzz from Budget Bee for this week!
But if you have your own budgeting tips or tricks you’d like to share with Budget Bee, Annette Tothill Finance’s newest team member, he’d love to hear from you on his Facebook page
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