Monday, February 26, 2024

How Can I Set A Budget That I Can Stick To?

When you think about financial advice, one of the words often springs to mind is the word ‘budget.’ People are always talking about it because it’s the hardest thing to do.

For most people, however, the word “budget” has a lot of negative connotations and emotions associated with it. Stop eating out with friends. Stop spending on the little luxuries that you want. Stop traveling so frequently. Stop buying that cup of coffee. A budget feels like an indirect way of telling you to stop having fun. Suddenly, it feels like you can’t spend money on the things that made you happy anymore every time payday rolled around.

Building wealth tomorrow starts from the actions that you take today.

Budgeting feels restrictive, like a barrier that is put in place to stop you from having fun. It feels restrictive and unpleasant, and right now, you’re probably still asking yourself if this is a good idea. Do you want the truth? The answer is yes, this is a good idea, and yes, you do need a budget. You see, building tomorrow’s wealth starts from the actions you take today. We’re here to take a different approach and to start thinking about budgeting as less restrictive and more about creating awareness. It is about being aware of your spending and then cutting back on the areas you don’t need to be spending.

In the beginning, the time you invest in setting up your budget will be well worth it when you see just how far your money can stretch. You’ll realize this when you write your business checks to pay your suppliers on time or see your accounts balancing on the positive side. All of these are positive effects of budgeting. It will be refreshing; not always feel like you need to scramble to keep your head above water. If you’re tired of feeling stressed about money, this is the only long-term way to fix it. Think of each dollar you earn as a soldier in your army, battling the forces that threaten to take you away from your goals and retirement plan. You’re the general of your bank account, and it is now your job to give every single one of your soldiers a job to do. Your battle plan? A budget.

Getting started on a budget you can stick to doesn’t have to be complicated. Here’s what you can do to simplify the process:

  • Step 1: Knowing Your Income – This one is easy enough. Knowing how much you can save and spend each month requires knowing how much you’re taking home at the end of the day after taxes, insurance, 401K contributions, and other stuff. Your budget needs to be based on your net income, not your salary.
  • Step 2: Figure Out Your Fixed Expenses – Determine your fixed expenses monthly. These numbers don’t fluctuate or experience any dramatic change throughout the year. These include rent payments, mortgage payments, car payments, insurance, and other loans you may have. This is also an excellent time to ensure that you’re creating a safety net to help you pay for these expenses in case of an emergency.
  • Step 3: Figure Out Your Variable Expenses – The bills that change based on usage, like your phone, utility, and grocery bills, are examples of expenses that tend to fluctuate each month. Flexible expenses like restaurant meals and clothes should be included in this category.
  • Step 4: Determine What Is Important – Creating a successful budget means taking a good, hard look at what you believe is necessary. You need to separate the needs from the wants. As much as you think you “can’t live” without the latest phone or gadget, this expense should fall under the “I would like to have” category. These are not a priority. You need to rank your costs in the order of importance and cut out the stuff that you don’t need.
  • Step 5 – Follow and Review Your Spending Monthly – Give your wallet a fighting chance by keeping an eye on your budget. Ensure that you’re spending within limits throughout the month. It’s easy for small things to add up if you don’t account for them quickly. Establish a system that works for you to keep track of your expenses. A pen and paper. A spreadsheet. Budgeting apps. What you choose to go with is up to you.
  • Step 6- Keep two bank accounts- Separating your bank account for expenses and payments and one for savings is the easiest way to separate your finances. The bank account you get your paycheck in should be kept for expenses and bill payments. After determining your monthly expenses, make a commitment to transfer a set amount of money to your savings account. This way, you keep both finances separately.
  • Step 7- Set Follow-Up Goals– Once you’ve reached your financial goals on the personal and professional front, you should set follow-up goals. Let’s say you’ve saved up $10,000 in your savings account. What do you do? Indeed not spend it. Decide what you do next. Your next move can be as simple as ‘Do not touch the money until x date,’ or you can decide to diversify the money by investing some of it. Your next goal can also be continuously reducing your debt with your business suppliers or bills. It can also be investing in better equipment so long as you know that it will increase the productivity or the quality of your products and business.

A budget is a process that will take time and effort, but if you put these steps into place, what you’ll be getting in return is well worth it. Don’t be afraid to discuss it with your family and seek their support. You’re entirely reinventing your finances as you know it, and it will help you if your family understands this and gets on board with it. Use family discussion time to try and work towards building some common financial goals that everyone can pitch in and work together on. Having that familial support is essential in encouraging each other to keep going when it hits you the hardest.

Sam Allcock
Sam Allcockhttps://www.abcmoney.co.uk
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

Recent Articles

Related Stories

sakarya escort bayan Eskişehir escort bayan