Budgeting is a fundamental financial skill. If you don’t master it, you can have a seven-figure income but still feel like you’re broke.
Here’s how you can get started.
Keep It Simple
Most of us know why it’s important to stick to a budget but we also know how much of a struggle it can be. That’s why you need to keep it simple, especially if you’re new to the process. You can start by allocating your money to broad categories. Take the following, for example:
- 20% for Savings – emergency fund, medium to long-term goals
- 50% for Expenses – bills, rent, groceries
- 10% for Investments, if you have any – 401K, Retirement Fund
- 20% for Discretionary Spending – more on this later!
Don’t make budgeting more complicated than it has to be. You’re better off with putting that effort into implementing a simple plan. You can always make adjustments along the way.
Automate What You Can
The thought of your money moving around without you knowing can be scary. But that’s not what automation is about. It simply implementing the decisions you’ve made beforehand—which is what budgeting is all about!
Every month, there are predictable expenses that you have to pay, such as the rent and utility bills. You may have also decided to allocate a portion of your paycheck to your savings. Since those amounts aren’t likely to change often, they’re safe to automate.
With fewer decisions to think about each month, you’re more likely to stick to your budget.
Keep Your Goals in Mind
Why are you even bothering with a budget in the first place? Because the money you earned is not just a number in your bank account. It’s a valuable resource that will help you do the things you want throughout your life.
Whether it’s for paying off debt, saving to buy a house, or investing so you can live a comfortable lifestyle upon retirement, always remember why you set your budget goals. With consistent action, you’ll achieve them before you know it!
Don’t Forget to Treat Yourself
While managing your finances will help you towards the future, you still need to enjoy the present. Here’s where we circle back to allocating funds for discretionary spending.
Think about it like this: Following through with your budget means you’re making progress towards your goals. Since you’re fulfilling your responsibilities, doesn’t that deserve a reward? Go ahead and treat yourself for a job well done!
Dealing with money shouldn’t make you feel miserable. Learn to use it well and you can enjoy its benefits today, tomorrow, and for many years to come.
Budgeting and saving are just the beginning. Spectrum Financial Group will help you take your financial journey even further. Get in touch with our expert advisers and we’ll make your money work for you.