So, you want to save money.
How can you do so successfully? Creating and sticking to a budget can be difficult for many of us.
With those new shoes on sale, emergency finances, and the holidays around the corner, have you set a realistic budget? Studies show that only 30 percent of Americans prepare a detailed, long-term financial plan.
If you’re wondering how to plan a budget and actually follow it, this article can help.
What’s My Income?
The first step in creating a budget plan for yourself is to calculate your total income for the year. By doing so, you’ll find out how much you can spend and can plan for expenses.
Record your total income for the year including main jobs, side hustles, and any other money you might make. This final number should be what you’ll have after taxes and other deductions.
When learning how to create a budget plan, record all numbers in a spreadsheet. This can help you to keep track of money and stay organized.
What Are My Spending Habits?
Now that you know your total income for the year, it’s time to determine your spending habits.
In your spreadsheet, document monthly expenses, or expenses that will stay the same throughout the year. Things like housing, car payments, phone bills, food, and insurance may be a part of this category.
Next, estimate how much you’ll spend on clothing, travel, and non-necessity items. Some of these items may include things like haircuts, manicures, going to the movies, or birthday gifts. This amount can change as time goes on.
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How Much Will I Save?
When learning how to set up a personal budget, be sure to account for savings. This money will come in handy when paying for emergency expenses, downpayments, or luxury trips.
Many experts recommend saving 20 percent of each paycheck to build this portion of your financial plan. Consider following the 50/30/20 rule. This rule recommends allocating 50 percent for essentials, 30 percent for leisure, and 20 percent for savings.
Remember that depending on your financial situation, this amount may differ for you. Be sure to account for this amount in your budget spreadsheet.
How Can I Stick to This?
So, you have the basic framework of your budget, but how can you stick to it?
One top tip for following your budget is to plan weekly. Depending on what you have going on that week, your budget may differ.
If you’re attending a birthday party, concert, or going on a day trip, you’ll likely spend more money than on an average workweek. That’s okay. As long as you account for this each week, you can stick to a realistic plan.
Another top tip is to meal prep. Young adults spend an average of $173 per week on food. If you’re looking to stick to your budget, consider planning your meals for the week and cook at home.
Finally, another top tip to stick to your budget is to practice discipline. When saving money, you may not always be able to say yes.
Going out and buying new shoes will always be there. To save money, you must learn to prioritize your budget. Your pockets and finances will thank you.
Plan a Budget Today
While it may seem daunting, planning your finances is a must, and it’s simpler than you may think. Guarantee your future and plan a budget today with these top tips.
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