How to create a budget that’s perfect for you

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Many of us check our bank balances only to be saddened by how little money we have in our savings. Maybe you can go without eating takeout four nights a week, or maybe you can’t, whatever your income there is always a way you can save a bit of extra cash at the end of the month.

You’ll need to set out a saving plan

Do you have a goal ahead that you’re budgeting for? Maybe you’ve got a vacation to save for or a wedding. Whatever the occasion, you can start saving in small amounts, and by the time you’ve come to shelling out the money, you’ll have plenty in reserve.

50-30-20

There is a school of thought in budgeting that allocates 50%, 30%, and 20% of your income. You’ll spend 50 percent on your monthly bills and food costs, then 30 percent will go to saving money for an event or saving for retirement. Finally, 20% will be the money you’re allowed to spend and have fun with. This isn’t set in stone, and you can alter the budgets slightly, but it is a general outline, to begin with.

Don’t forget to keep things simple

Sitting down and assessing all of your expenses can be intimidating so make sure you break everything down into simple pots to begin with. Just have a general ‘bills’ category to begin with, and as you get to grips with your saving plan, you can start breaking these into subcategories like ‘rent,’ ‘food,’ etc.

Never exclude any expense

If you are going to get on top of your finances, you’ll have to be honest with yourself. Keep the receipts for everything, even the donut you snuck in at lunchtime, it all adds up. Sure you should be allowed a donut from time to time, but you can allocate a part of your budget for ‘donut money’ if you wish, you’ll just need to know how much to allocate. For yearly expenses, like insurance, divide the annual sum by 12 to get your monthly cost breakdown, this will help with your monthly budget plan.

Always monitor your expenses

Once you get into the swing of checking your finances regularly, you can begin to alter your spending habits if they are not going to be sustainable within your set budget. Try not to change the budget but instead your spending habits, this way you’ll be more likely to stick to the budget instead of breaking it often. Make sure when setting your budget you give yourself some room for emergencies. It is no good spending the maximum of your income as you won’t have any in reserve when the time comes for needing it.

Plan for spontaneous spending

When you’re putting some money aside for a rainy day fund, try and put a little extra aside that you can give to yourself as a little reward. Think of it in dieting terms, you may be familiar with the term ‘cheat day.’ Often when people are sticking to strict diets they will allow themselves a cheat day where they can eat whatever they want, but only for one day in a month. Set a little bit of money aside each month to allow you your very own financial cheat day. This will give you the satisfaction that spending money and shopping can bring without breaking the budget – because you’ve budgeted for it!

Hopefully, these tips have helped you create the perfect budget that will have you saving money in no time. Just have a little faith in yourself, and you can do it!

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