Creating a budget can be a big task but breaking it down into categories will allow you to take steps to achieve your goals. Writing down everything you pay for, categorize those into something that makes sense to you. Categories for your budget could be income, bills, entertainment, saving goals. Write down all the categories and organize the information to learn about all your spending and saving habits.
Income
Collect your income statements and find out what you bring in consistently. All of your income, counting any side jobs, self-employed work, retirement income, or normal salary. I personally take the last six months of pay to find a current average. Having a good understanding of when and where income is coming from, gives the opportunity to plan for bills of when they occur.
Bills
Rank all your bills by importance and note each bill that could vary. By doing this, it will allow you to easily be able to be flexible with knowing what will be first to go if ever needed or which area you can cut back to save money. Understanding when bills are due allows you to optimize the use of your money.
For example, electricity bills can vary, but it would not be a bill to cut. Unplugging devices that are not used, it’s not going to cut the bill in half, but it will help save.
Entertainment
How much do you spend monthly on going out to eat, watching streaming services, or anything else that might not be necessary, but you like. Many people I have talked to have no idea how much they spend going out and are normally shocked to find out how much they spend.
Saving Goals
Having saving goals will allow you to plan for the future, breaking this up into categories for retirement, emergency fund, and saving up for big purchases. Setting marks within the goal can help you stay motivated.
Loosing motivation can be a huge part of people not reaching their goals with savings. Set attainable goals that will challenge you, maybe maxing out your retirement savings for the first time.
Tracking
Continuously tracking income, bills, and money spent will help you understand where you stand with your saving goals. Create a time monthly, weekly, or anytime line that works for you.
Budget Ideas
30% Rule – mastersaffiliate.com
50-30-20 rule – mastersaffiliate.com
Zero Based Budget – mastersaffiliate.com
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