Budgeting Tips for the modern day Individual

Managing your money without a budget is like roaming a big city for the first time without a map. You never know how much you’ve spent until you run out of money, and then you have to patiently wait until the next boost of income. You should learn to spend less than you earn, else you may land in big financial trouble someday.

Basically, budgeting is just a plan to systematically manage your finances, but looking at this stat, two-thirds of Americans don’t care about it! Look at it as a way to going a long way in getting out of debt (if it is there), saving for retirement, and getting other benefits. You can take help of the following tips for organizing your funds:

How to Budget?

Planning your funds is not a big task, it doesn’t take a lot of your time. Just a few steps and you will get there…

• Firstly, jot down all your expenses incurred in the period you are making the budget for (a month will be good). Write in what all activities your money is going, like rent/mortgage, various bills, grocery expenses, insurance, any other loans, travel spending, entertainment spending, shopping or eating out, et al.
• Determine all the unnecessary spends, the ones where expenses may go out of hand. Gradually weed them out by not giving them a place in your budget plans.
• Know your income, if it is fixed, well and good; but if it is variable, then assume an estimate. You can either consider the lowest one you’ve got till now or the average of all the variables till date, the former will be better.
• Involve your family, your spouse in the budget planning so that everyone will know the household spending of the next few days/weeks.
• You can also take the help of many free spreadsheets and budgeting apps in drafting the ideal budget plan for you.

What to Budget?

By this time, you should have a fair idea of what usually do you spend money on and who else in the family requires what for the month.

• You can try the 50/30/20 plan introduced by Senator Elizabeth Warren where 50% of your income will go to the necessities like paying bills, rent or debt, groceries, gas for vehicle, etc. 30% will go for Lifestyle spending like shopping, movie at the theater, eating out, etc. and rest of the 20% into your long-term savings.
• Don’t include all your income in the budget, leave out some amount of it (and that is totally different from the 20% savings mentioned above) for any emergency.
• Plan also to reduce your spends on necessities like saving on energy/electricity for lower bills, driving less, eating out less for lunch and taking Tiffin from home, etc.
• You can keep a track of your spending to know whether you are operating accordingly or is it getting out of control? You can also update or reorder it in between as needed.
• Don’t forget to celebrate the small wins and also when you successfully stick to the budget for the specified time. With equal enthusiasm, plan a similar or better budget for the next month!

Having a budget will not limit your freedom; rather it will give you freedom! It will give you strong control over your money. Once you have made an elaborate budget plan of your finances, follow it to the T. Remember, some of it may swivel here and there with some emergency spending or delays, but stick to it and you will be just alright until the next budget plan.

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