Do you want to finally learn how to budget your money? Is it time that you create a budget that actually works?
Budget tracking can work. You just need to remember that it’s more of a guideline than set rules. I want you to learn about budgeting so that you don’t have to rely on your student credit card for your expenses at the end of the month.
How can you budget your money the smart way?
Pay yourself first if you want to budget your money.
The most important thing when it comes to budgeting and saving money is that you set aside money into your savings before you do anything else.
I won’t give any percentages or numbers because every person’s situation is unique. However, the general consensus is that you should aim to save AT LEAST 10% of your paycheck.
What form of savings you decide to do is up to you. Most new college graduates will aim to aggressively save for that first home purchase. Homeowners may strive to save more money for their retirement. You get the point, plan your savings accordingly.
Minimize your fixed costs.
I know it’s impossible to completely eliminate your fixed costs because we all need a roof under our heads and a means of transportation. You may not want to spend $10,000 to start an online business when you have an empty bank account.
With that being said there are many fixed costs that we all should strive to reduce. As a college student or new graduate you must really ask yourself:
Do I really need all of those subscriptions or that deluxe cable package?
I’m not saying to eliminate all of your fun subscriptions because believe me there are some monthly subscriptions I’ll never get rid off. The trick is to try to eliminate fixed costs that you know you could live without and wouldn’t really lower the quality of your life.
Embrace budgeting tools & budgeting software.
Let’s be honest, when trying to get our finances under control we need to track our spending for the first little while. Trying to keep a mental note of our purchases simply won’t work.
This is where personal finance software comes into play. Budgeting tools help us keep track of our spending. More importantly, the budgeting software keeps us accountable for our foolish purchases. You don’t have to track every penny. It’s just important that you know where your money goes roughly.
Don’t forget about taxes.
It’s easy to make a perfect budget that leaves plenty of room for savings but never ever forget about your taxes.
Always set money aside to cover any taxes that you think you will have to pay. I have heard too many horror stories from people about receiving a large tax bill unexpectedly and having to borrow money just to pay taxes. Taxes suck. I hate them, but they’re just not going away!
Plan some fun into your budget.
I hate how other personal finance bloggers make it seem like budgets are all serious and no fun. I firmly support setting aside some money for “entertainment” or simply put “letting loose.”
I put aside anywhere from $20-40 a week for traveling the world or any other adventure. Don’t ever feel bad about spending your money on something you truly enjoy or something that helps you recharge after a long week of work/school.
That’s all I have to say for today about your personal budget and how you can budget your money moving forward.
2 thoughts on “Budgeting Tips: Making Sure Your Budget Works”
First, save as much as you can. Ten percent is good, but I target something more like 20%, even if I have no specific goal in mind. When you establish a meaningful goal, chances are you have the funds to attain it.
Second, if you’re trying to reshape your budget to reduce the money that you spend, you have to focus on where you spend the most – housing, transportation and food are usually the heavy hitters. Look at large expenditures and frequently recurring expenditures.
Third, there are lots of things that are fun and don’t cost much money. Once a 13 year old complained to me that there wasn’t anything to do. He lived in a 50 acre personal park on top of a mountain and had every outdoor recreational activity immediately available to him. Nevertheless, he wanted to “do something that cost money,” as if that was always the more fun thing to do. Think of free or nearly free things as your first choice for entertainment and recreation.