Saving is very important for your future but most people don’t realize that saving starts with having a proper budget. Even if you manage to put money away on a regular basis, if you don’t manage your other income well, you will probably end up having to dip into your savings account from time to time.
Here are a few tips to help you get on track:
KISS- Keep it simple stupid
Don’t try to break your budget into a million different categories focus on broad but simple categories. If you have too many categories, budgeting can get over whelming. For example: Fixed Expenses, Savings, Entertainment/Spending, and Emergency Fund.
The idea, is once you know how much you must to spend on Fixed Expenses like Rent, Insurance and food, then you can make decisions on the remainder of your income; how much you would like to be save each month and what is left for other spending and entertainment money.
Evaluate your lifestyle
While every little bit counts try to set up a substantial goal if your income allows it. If you can’t save 10% of your income you may be living above your means. Ideally you will should able to save 10% of your monthly take home amount. If that seems like too much of a strain then evaluate some of your fixed expenses. Are you paying too much for cable? Could you change your phone plan to save more? Look for ways you can cut back on fixed costs.
Making Savings a Priority
If after your fixed expenses you have $400 you should designate more of that for savings instead of other spending. Designate $150 for spending and $250 for savings. Don’t make your budget thinking about the things you’d like to do but the things you need to do.
Decide your savings goal. Would you like to have $5,000 saved in the next year? How much would you need to put aside each month to do so? Set attainable goals and make a realistic plan.
If you’re making $50,000 a year you probably cannot expect to save $30,000 over the next 12 months.
In conclusion build a budget that you are comfortable and can maintain. Focus your efforts on saving more and spending less.
What are some tips you use when budgeting?