- Budgeting for beginners
Let’s take the biggest step first. If you’re planning on moving out, getting control of your finances is Job One – and that means making a budget. Don’t worry; it’s a lot less scary than it sounds. You’re not going to need to become an expert accountant overnight. All you have to do is paint yourself the clearest, most complete picture you can of the cash you’ve got coming in and going out, then use that information to make a plan.
One of the best ways to do this is to draw up a “zero-based” budget (sometimes called “zero-sum” budgeting). All this really means is listing out every penny of your regular income, no matter where it comes from, and every penny going out, whether it’s spent, invested, saved or just given away. You can read more about zero-based budgets in our other guide, “4 Fixed Income Saving Strategies – Combine to Win!”
So, with your zero-based budget all mapped out, what can you do with the information? Well, for starters, it’ll make it a lot easier to get into some great saving habits. When you’re putting away your spare cash, little and often’s usually a lot better than dumping in larger amounts at random. With the information from your budget, you should be able to set yourself up a “50/30/20” system. Basically, each month, you set aside 50% of your income for essential expenses, 30% for fun stuff and 20% for savings. The trick to it, of course, is keeping the consistency up. Whatever you’re saving toward, though, building good habits from the outset can make a huge difference to your overall finances.
