Staying within your monthly budget is easier said than done, but it is doable. You only need to have the willingness to do it, the discipline, and the drive to stick on to it. In this article, we’ve gathered some great tips for everyone to help them with their monthly budget and how to stick with it.
Priorities your Monthly Payments
The principal payments you must make upon receiving your income are your monthly bills. These bills consist of water, electricity, phone plan, mortgage, loans, among others. Ensure that these items are crossed out on your list first.
Savings and Emergency Fund
After settling your monthly bills, you may think that you can now divide the money you have left in other areas you need. However, the best schools of thought mention the significance of saving and starting an emergency fund. According to experts, your savings and emergency fund will come in handy during a financial crisis. To ensure its effectivity, your emergency fund must be equal to six months of your salary to be able to get going whenever an untoward incident happens. That should be your goal.
Nevertheless, even if you will not be able to reach your goal of having a sumptuous emergency fund, it is still better to have any amount of emergency fund than none at all.
Know your Income
It is essential to understand how much you earn to come up with a budget effectively. Include a margin of safety when noting your income to include instances of deductions. When making a budget for a household, also include the income earned by people in the family.
Note down your Expenses
After paying your bills and setting aside an amount for your emergency fund, you can now divide your remaining money. It helps to see what your expenses are. You can either write it or use a software or a mobile app to help you with your budgeting. Just ensure to select credible and safe applications.
Wants versus Needs
Whenever you make your monthly budget, try to minimize unnecessary expenses. You are the only one who can identify what you need versus what you want.
Basic needs include food, water, and allowance for your children (if you have) and even gasoline is a basic need, especially if you own a vehicle. A budget for auto repairs is another factor to include. This is specifically helpful if you intend to acquire a specific item for your car or if your vehicle needs particular maintenance procedures. On the other hand, wants include lunch or dinner dates in restaurants, new clothes and footwear, and even payment for online games or mobile apps.
Plan your New Purchases
There may also be instances that you intend or need to purchase new furniture or gadgets. In these cases, it is better to include the budget for these items in your savings. Evaluate if it really a need or if you just want it for the sake of having it. If it is urgent to acquire these items, an option is to apply for a loan or use a credit card with monthly payment options. Do note that these will alter your monthly budget. Also, consider how much you can allocate for repayment before making a purchase.
To further stay on track with your budget, try to give yourself a weekly allowance and stick to it. It is also beneficial to plan your meals and plan activities to be able to allocate the appropriate funds. Avoiding vices are another essential factor. Remember that saving and sticking to your budget requires a lot of discipline. Although you can allow yourself a treat once in a while, do be smart and thrifty about it!