It’s really important, no matter how much money you make to see where all your money goes. A well thought out spending plan can ensure that we have enough to cover all the essentials things we need for our home and in our lives, and can help us save for extra treats like vacations, cars, and gifts. Without a carefully considered budget, we can lose track of our spending and end up in debt or financial trouble. To help everyone stay on track, here is our spending plan to avoid unnecessary expenses.
1. Identify Your Main First Categories of Spending
The first thing you need to do when making your spending plan is to identify the areas where you spend your money. These categories are usually groceries, bills, shopping, restaurants, and other recreation, education fees, medical expenses. You will also need a category for spending that is done once a year or semiannually like taxes and car insurance. This will help you to understand exactly where your money is going and allow you to see if it is being spent wisely or if any of it is being wasted.
2. Collect Data to See How Much You’re Spending
For at least two to three months, simply write down all of your spendings within each category. At the end of that period work out a monthly average and set that as your budget for each subsequent month. Do this for each category, whether that’s groceries, bills or restaurants, print out a calendar and write the budget for each category on the 1st day of the month. Then each time you spend money, write the remaining total each day. If for example, your grocery budget for the month is $500 you would write “Groceries $500” on the 1st. Then if you spend $100 the next day, you would write “Groceries $400” on the 2nd so you know how much you have left. This will alert you to when you are going to run out of money so that you can plan accordingly. If doing this daily is too much, update your calendar every Sunday evening so you start each week with a fresh budget in mind. Color-code your calendar for each category so that you can clearly keep track of your spending.
3. Check Your Calendar to See if You Will Need a Little Extra Money
Depending on where you live, there are many short term options to help get you through the month. When your budget calendar shows that you’re not quite going to make it this month, you will need to look for a little extra money. Inexpensive cities, where the cost of living is often much higher, a payday loan is a useful option. We found this resource for a Singapore payday loan which may benefit anyone who needs a little top up until they get their salary at the end of the month. Living in big cities like Singapore, we will often experience hidden costs that we hadn’t accounted for and which we will need a little help to pay. That is why a good spending plan is so important so that you can track your money and act ahead of time when necessary.
4. Savings
If you find that you have money left over after budgeting for the essentials and for the recreational activities that you enjoy, then you can start saving towards a family vacation, a new car, or a good old fashioned splurge. There are two main methods of putting money aside and which one is best for you will depend on your financial situation. You can either pay the amount you want to save into your savings account at the beginning of every month.
This will guarantee you a certain amount of money saved, but if you are on a really tight budget, one unforeseen incident could put you in big trouble. This method is better for people who know that they will have a surplus amount of money, even if they go well over their monthly spending budget. The other way is to try and be really strict with your budget so that at the end of the month, there is money left over that can then be put into savings. This is better for that whose spending plan has to be followed rigorously because otherwise, they may have trouble making ends meet.
If you find that your finances are tight, budgeting wisely can help to ensure that you cover everything that needs paying for and that you can afford some of those things that you thought were out of reach. If you’re new to budgeting, just make sure to look carefully at every dollar you spend, and try to cut out any unnecessary wastage. A good spending plan does not mean that you have to deprive yourself of the things you enjoy, it just means that you take everything into account to make sure that you have a balance between your income and your outgoings.
