If you’re determined to effectively budget your finances, simply continue reading to discover 5 key tips to remember.
How to Budget Your Finances: 5 Key Tips to Remember
Get into the habit of creating a weekly budget
Once you’ve figured out how much disposable income you have on a weekly basis, you can decide how much money to budget for groceries, shopping and activities. As if you don’t have a firm budget in place, you’re likely to overspend on items, which you don’t need.Ideally, you should also look to save or invest at least 20% of your income. As you don’t want to live from paycheck to paycheck, for the rest of your life.
Adopt a 50/30/20 rule to guide your spending
You may want to adopt a 50/30/20 rule, where you allocate 50% of your weekly budget to necessities such as purchasing groceries and paying your power bill and 30% of your income to discretionary items such as purchasing a new pair of shoes or enjoying dinner at your favorite restaurant. Which leaves 20% of your weekly budget to invest or place into a bank account.
Record every cent that you spend
It’s well worth creating a spreadsheet, where you can document every cent which you spend. As there’s no point creating a weekly budget if you don’t know how much money you’re spending. By recording every cent you’ll spend, you’ll also discover what areas you’re wasting money on, which will allow you to reduce any unnecessary spending which may be going on.
As an example, you may find that you’re spending far too much money on clothes, which you don’t need or you may spend a small fortune on socializing with your friends.
Write down your top 3 priorities for the year
Unless you have an unlimited passive income, it pays to prioritize your goals. As an example, your top 3 priorities for the year ahead, may be to save money for a house deposit, to enjoy an overseas vacation and to renovate your kitchen.
It’s well worth writing your goals on a whiteboard, which you can look at on an everyday basis. As you’ll be far less likely to spend your disposable income on buying cheap fashion or junk food when you’re clear about the goals which you have prioritized.
Organize a monthly automated transfer
Most banks can automatically transfer a percentage of your fortnightly income from your short-term savings account, to a separate long-term savings account. If you’re committed to attaining your financial goals, it’s well worth having 20% of your income, automatically transferred to a long term bank account. Which boasts a high-interest rate.As most long-term bank accounts penalize account holders, who take money out before it’s matured, you’ll also be far less likely to withdraw money, in the short term.
So if you’re looking to regain control of your finances, it’s well worth following the 5 foolproof tips listed above. As they are guaranteed to help you successfully budget your finances and plan for your future. After all, if you don’t plan for financial success, you’re effectively planning for financial ruin!