How to Budget Effectively and become a Super Saver.
A budget is an estimate of income and expenditure for a set period of time. It may also include planned sale volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. Companies, governments, families and other organizations use it to express strategic plans of activities or events in measurable terms.
A budget gives you specifics of where your money goes, which in turn prevents unnecessary expenses.
Creating a budget is important to track your expenses, however sticking to one is most important.
A budget plan would keep you off debts or help you work your way out of one if you currently have one. It also helps to control spending and achieve saving goals.
Ever wanted to create a budget? Well before doing that, the following should be taken into consideration:
● Make it flexible to changing needs
● Make it realistic
Guide on How to Create a Budget.
1. Record all sources of income: Whether you do a 9–5 job or self-employed, keep a record of all your sources of income in a spreadsheet. If you have other side gigs that generate income monthly you should include them as well and this total income as a monthly amount.
2. Financial Statement: Gather your financial statement. This includes utility bills, bank statements, feeding costs etc and other information regarding a source of income or expenses.
3. Create a list of monthly expenses: Write down a list of all the expected expenses you plan on incurring over the course of a month. This includes auto insurance, groceries, utilities, entertainment, dry cleaning, data, feeding — essentially everything you spend money on.
4. Make adjustments to expenses: If you have accurately identified and listed all of your expenses, the ultimate goal would be to have your income and expense columns to be equal. This means all of your income is accounted for and budgeted for a specific expense or savings goal.
In a situation where your expenses are higher than income, you should look at your variable expenses to find areas to cut. Prioritize in order of importance to the least. Since these expenses are typically non-essential, it should be easy to save some cash in a few areas to bring you closer to your income. For example, cut back on eating out or not buying what you want but actually need.
5. The popular 50/30/20 budget plan: Ever tried the popular 50/30/20 budget plan? If not, we recommend you do. In it, you spend roughly 50% of your after-tax money on necessities, no more than 30% on wants, and at least 20% on savings and debt repayment.
We like how simple this plan can be. With just enough room to manage debts, room to indulge occasionally and save for investment/retirement purpose.
It is highly important to create a budget and stick to one as this helps precision on spending and makes you save more.
