Budgeting is a word that can strike fear in the heart, but financial ruin because you never know where your money is going is much worse! Knowing how to createa successful budget is key to getting out of debt, creating a savings plan,and, of course, managing to stay out of debt long-term.
With increasingly more people struggling to make ends meet, you might find yourself wanting to learn how to create a budget that works for you! The key to a successful budget is being realistic and really dedicating yourself to sticking with it.A budget is a great way to get yourself on track and monitor your spending so that you can be smart about your money, rather than spending unwisely. These tips will help you create a successful budget and get yourself out of debt and closer to financial stability!
How To Create A Successful Budget
Sit down and plan on paper Whether it’s just you, or you have an entire family to plan for, it’s a good idea to sit down and really talk about where everybody is willing to make cuts. In order to plan a budget, you’ll all likely need to make some small sacrifices to free up finances in certain areas, so go in with an open mind and a willingness to contribute to the family fund.
Print out your last few bank statements Printing out your recent bank history is a good way to get a better understanding of your spending habits and where you need to cut down. If you’re eating out too much, it will definitely show in your bank statements. It can sometimes be a bit of a reality check, so don’t get too down about your previous spending habits. Keep in mind, mistakes are just lessons for us to learn from! It’s important to note that you’re doing this in order to plan a successful budget, and you ARE able to turn it around and spend wisely!
Overestimate Expenses When you go through your previous statements, look at your highest spending for each category. It's better to overestimate your expenses than to only budget x amount for a bill and have to borrow from another category to pay it.
Underestimate Income Unless you are salaried, you need to use the lowest income you could receive. I always go with the lowest paycheck we've received in the last 3 months when calculating our income. Much better to have extra money to allocate later than come up short!
Use budgeting software Personally, I'ma huge fan of YNAB (You Need a Budget) because I can use it from all my devices. EveryDollar from Dave Ramsey is another one that comes highly recommended. I haven’t used it yet, but did use & love My Total Money Makeover from him. EveryDollar is free, while MTMM has a small monthly fee.
Reward yourself If you are the type of person who benefits from a reward system, absolutely set one up! For instance, if you stick to your budget for 3 months (a quarter of a year!), consider splurging on something you want – within reason or maybe have a nice dinner out. Sticking to your budget is important, but doing something nice for yourself can be important too – just remember to add it to the budget before hand!
Pay yourself first I used to hear this and wonder how anyone did it, then I learned the multiple bank account trick. We now have an emergency fund savings account that is connected to my checking account. In the event of an emergency, I can transfer over funds & take care of things. We also have sinking funds: one for the roof, one for the kitchen remodel, and one for my new car. I have automatic transfers set up that match my budget, so that money goes POOF! from my checking account on payday, before I have a chance to miss it. The best part is each of those sinking fund savings accounts earn a much higher interest than my local savings account and the money isn't easily accessible!
Live below your means I hear the “rule of thumb” that you need to be saving 10% of your income and your housing (rent/mortgage and utilities) should be 25-45% of your monthly income. The remaining 45-65% is for food, transportation, vacation, etc. That's NOT how we do it. Our housing is 12% of our income. Our total savings is 30%. Our vacation fund is 1% of our income, but our food budget is 17%! The remaining 40% is gas, entertainment, cell phone, internet, clothing, gifts, and charity. By spending less on our housing, we are able to put more into savings. We are better prepared for an emergency, are able to resist going into debt when we need something, and are able to do more for others. Right now, your situation may not allow for much savings, charity, or even the dream of a vacation, but try to keep those things in mind when changing jobs, buying/renting a new home, and purchasing a new car!
If you follow these tips, you'll have a budget that you can stick with without feeling like your family is missing out on the good things in life before you know it!
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20%.
1. The zero-based budget. The concept of a zero-based budgeting method is simple: Income minus expenses equals zero. This budgeting method is best for people who have a set income each month or can reasonably estimate their monthly income.
Try the 50/30/20 rule as a simple budgeting framework. Allow up to 50% of your income for needs, including debt minimums.Leave 30% of your income for wants.Commit 20% of your income to savings and debt repayment beyond minimums.
The 50/30/20 rule is a simple way to budget that doesn't involve a lot of detail and may work for some. That rule suggests you should spend 50% of your after-tax pay on needs, 30% on wants, and 20% on savings and paying off debt.
The 50/30/20 rule can be a good budgeting method for some, but it may not work for your unique monthly expenses. Depending on your income and where you live, earmarking 50% of your income for your needs may not be enough.
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
One popular guideline, the 50/30/20 budget, proposes spending 50% of your monthly take-home pay on necessities, 30% on wants and 20% on savings and debt repayment. The necessities bucket includes non-negotiable expenses like utility bills and the monthly minimum payment on any debt you have.
For example, like the 50/30/20 rule, the 70/20/10 rule also divides your after-tax income into three categories but differently: 70% for monthly spending (including necessities), 20% for savings and for 10% donations and debt repayment above the minimums.
Introduction: My name is Pres. Lawanda Wiegand, I am a inquisitive, helpful, glamorous, cheerful, open, clever, innocent person who loves writing and wants to share my knowledge and understanding with you.
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