This simple step-by-step guide will show you how to create a budget easily, manage your money better and learn how to make a monthly budget that works for you.
Do you want to know how to budget your money easily? Saving money is not an easy task, especially when many expenses and too many financial questions to answer have.
Every family has a different monthly budget and expenses. So you always try to find reasons to budget your finances and money. Every time you want to budget your money, you find it quite a task, not because you cannot manage it, but because this is not the only way you should go after it; you plan to spend so many other things on it.
So, it is not that simple to save money. People use different methodologies to budget their way of finance. For instance, using spreadsheets for saving money monthly is quite common. You will have also heard a lot about money-saving applications.
These are their way of saving money. But you may find it extremely boring. Remember you should learn to look after your finances and have better planning in spending money to secure your future and make sure you do not run out of money in bad times.
Here you are going to learn the easiest of ways to plan your budget, how to spend money and most importantly how to save the free money.
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How To Budget
1. What is your monthly budget?
Well, this is the first thing you should know that what is your monthly budget? How many expenses are there? So you need to know about your monthly budget and expenses first. The next thing you should follow is to have a plan for it.
Saving money is a tricky situation when there are too many holes to fill. So the only way you can save your money and budget your finances is to have proper planning behind it. When you plan to spend according to your expenses, you may have a personal satisfaction that everything is going according to the plan.
You know all the proceedings, and how to spend money and where. So this spending money is you call a budget. Planning can be useful in many ways, such as you know how much you need to meet the expenses and the next thing is you cannot go into debt if you make sure that you are spending money according to the plan.
So, this should be understood that there must be a plan behind spending money and this gives you the advantage of saving free money to budget your finance.
You may also like : 20 crazy simple ways to save $300 every month.
2. Calculate your money at first
This is also necessary, no matter what source you are following to earn money when you receive it the first thing you should do is to calculate it. This can give you an outlook and directions about your expenses. When you know the amount you are having, the next thing you need to look forward is to check last month’s income.
Check out how much did you spend or how much expenses were there comparatively the current month. Now you may be thinking what went wrong last month because you spent too much money, so you find those areas to improve and have a grip over it this time around. You also take care of the money that was spent uselessly.
After all, these things, take your money out and divide it equally by 12 to see how much you can save monthly. That determines the difference between how can you spend money and how can you save it. So do check out that you divide the money equally and the x-factor of dividing this money is that you can have that free money you need to budget your finances.
3. Save your money first (have an intentional plan)
This step is why knowing how much you save per month. After knowing that you have the given amount in your hand, the later thing is to know what amount can be suitable to reach your financial goals. Everyone representing his family has his own particular financial goals and to reach those goals, you must be keen on not only saving but of course spending money carefully.
For you to save your money and budget your finances, you will have to compromise on your expenses and also relate it with not spending it uselessly. So the idea is actually that you always have that short or long term financial goals but for you to get yourself right there, you possibly need to have extra care of the money. So keeping extra money for the expenses is essential and also you must save the free money that is going to help you financially.
4. Watch out and figure out where your money goes actually
This is probably a difficult task you can have. It is understood that not everyone’s family has the same budget that too to the other. It differs that people having relatively good bank balance and are financially strong have a better spending plan. They also don’t have too much pressure on spending money.
But how come people with less money and too many expenses? So it becomes a headache for them to reach their monthly expenses first whereas saving money seems unlikely for them. To have control of the expenses or to manage your finances is more than an uphill task. But here are the categories you spend your money and should be careful that you do not waste or spend it unnecessarily.
Whether you are living in a house of your own or might have a house on rent, expenses are still there in both cases. Let’s know about those who live there on rent, so the first thing at the start of the month they do is paying their house rent. In the other case, you will have to pay the property taxes, your home insurance and in case if you have to repair something, the house repairing utilities are there.
Well off course food is as essential as anything so you have a whole month in front of you and for you to get food daily is more than important. It also includes groceries and when at times families go out to pay in restaurants for eating out.
c. Health and medical
Human health is not guaranteed to stay the same all the time, you may feel bad or suffer at times. You may feel ill and not fit enough so you spend on health and medical on purpose. In that case, if you have a private doctor’s appointment so you end up paying there.
d. Transportation :
Transportation is another thing linked directly to your expenses. Your car payments, gas and oil, repairing and service fall in the very same category. In case you don’t have a car of your own, you have to pay through public transports as well. No matter wherever you go locally you are must pay public transportation.
e. Family expenses
There are too many family expenses no matter any house you live in. You have to pay a lot for your kids’ education. Their school, college or university fee is right up there in your expenses list. Then again there are the school supplies, the exam fee, other funding’s as well as the expenses on books and academic utilities. So this point adds a lot in the expenses category.
f. Personal care and entertainment
Personal care includes beauty and the clothes you wear or something you are bound to buy for your needs. Whereas in the case of entertainment if you are interested in playing games or watching movies so in that case, the usage of electronics count.
g. Pet care
Pets are not necessary for every house but if you are fond of keeping pets then be prepared to pay for their needs. Their food, pet insurance, and grooming should be in your mind.
h. Other expenses
Other expenses are occasional payments such as donations or gifts you buy on certain festivals and important days.
5. Rinse and Repeat
So you have come to know where your money goes in the above categories. This is going to determine your planning and spending money. So when you see these categories and expenses on them, you will have an idea of how much you are left with or how much can you save after spending on these expenses.
If you find it difficult to save, then the least you can do is to lessen the expenses. But even you cannot do this, you should not worry or rush things. You will end up nothing in pressure. So you will have to be a bit compassionate because the first few months will be spent on categorizing and planning things.
6. Create a spending plan for free money
The only way you can make it easy for yourself is to have a spending plan. You must be aware of when to spend send when to save. You will have a balance between spending and saving. So make sure you plan at the right moment and execute it perfectly.
7. Paying bills on the same day when you receive
Taking care of the bills is a part of your planning and it is as important as taking care of your money. All you need is to pay bills on their exact time just because you do not have to pay extra for them. Since you are paying bills on time, you are assured not to waste your money or you may not run out of money.
8. Have multiple bank accounts
This is another way to have a balance between spending and saving. So have your two accounts possible, one for the monthly expenses in which you have to spend money on different things, while the other is for saving money to budget your finances. After planning you can have the direction of saving a certain amount each month so this is a key way to save money.
The day you have a grip on those two accounts, you may know that the account you are saving money in does not belong to the one in which you spend money on different expenses.
9. Set financial goals and save for the future
When you have financial goals to chase, you need to save money. But you can go little by little, taking small steps, saving money every month and have an extra account. Either you can lessen the expenses, make a budget out of it, or buy something of your needs only. This is very helpful since you can save from every angle.
You can wipe out the extra expenses, and spend there only where it matters the most. But be sure that the money you are saving for the future is not in your spending plans or you should deduct the money to fulfill your expenses.
10. Invest money can help you reach your financial goals
Investing money is always on purpose. To get benefits or get more money you go for investment. Or often you have your financial plans to work for or have the required money for. Investment always seems healthy and beneficial, it can give you or cash you with a profit.
So, if you are going to save money, start investing it somewhere. You know that since you have invested the money on a given date, you will have to wait to receive it later.
These are the steps why investment is key:
- Can prove to be helpful in savings
- Investment can give you that x-factor or step to budget your income you are looking for
- Once you start investing, there is no financial pressure
- You will have a difference in ratio between spending and saving
So, these are the ways you can adopt to save money and budget your finances, depending heavily on your income, you should have an idea of your money, planning, expenses and how much money you are left with at the end of the month.