Everyone lives a different life. We all have different incomes, hobbies, goals etc. Creating a budget based on your needs and goals is the smartest way to budget. Maybe you want to save up for a house or maybe you want to be smarter with your money.
Creating a budget can be for anyone to ensure you are not spending too much where you shouldn't be. When creating a budget that works for you there are a few things to consider like; expenses, tracking and spending habits, goals, and basic budgeting rules and guidelines.
What are basic expenses?
At the end of the day we all have expenses that add up regardless of how we live our lives. We are all working with different budgets however we cannot allow our basic expenses to add up to a point where we are left with little or nothing leftover for various expenses or emergencies.
Having some financial freedom may open up more doors for different possibilities be that a new investment or possibly a vacation. No matter what tax bracket we are in we need to be smart with our finances and always have a bit of cash for fun activities or simply for emergency situations.
Basic expenses are expenses most people have that add up and take up a portion of our income to simply live without all the extra stuff. These basic expenses include the following:
- housing
- utilities
- vehicles and transportation, gas, insurance
- groceries
- internet, cellphones
- debt
- memberships and subscriptions
- health care
- emergency fund
- fun / eating out
- child care
It is always great to have a plan for these and anticipate how much of your income may be eaten up by these regular everyday, or monthly expenses. If you are struggling with your budget you should consider monitoring and tracking all expenses to ensure you are not spending too much where you really shouldn't be.
How do I track finances and create good spending habits?
Think of your long term goals and how you will reach them. If you mess up, don't stress, just get right back on track. Make good spending habits and be mindful of your spending. At the end of the month you can always review spending habits and then update and make changes you deem necessary.
Sometimes it can be helpful to think a purchase over and decide whether or not you really need something or if you may just simply want it but not need it. Many everyday purchases can affect your longer term goals which are more important to your overall financial goals, success and happiness.
In order to fully track your spending habits it may be great to work with an app made to track all your expenses and purchases. Often we do not fully realize how much we are spending and where it is going unless we continuously track and monitor our spending.
Useful tools and apps for tracking funds may include: Mint, YNAB, or Banking apps.
Services like Mint will even track your monthly subscriptions because services like Spotify, and Netflix subscription based spending is the new thing. This type of spending can really add up when you have multiple subscription services and alone they will not seem like much but they can really add up over the months.
What should my finance goals be?
As far as budgeting and tracking expenses it can be a really great motivation to consider your goals as they will keep you focused and on track. Your goals may be extremely simple as to saving a little money or even more intense trying to save as much money as possible.
Furthermore your goals may be to save up for a specific item you may need or desire or you may be trying to save up for a larger purchase such as a house. Everyone's goals are different and you should really only consider what it is you want for yourself and your own budgeting, financial or personal goals.
Consider using the S.M.A.R.T. Goals abbreviation when thinking of your goals:
Specific - Make sure your goal is specific. Example: “I will stop eating out multiple times a week.”
Measurable - You need to measure your goal to see if you are meeting your monthly allowance per category of spending. “I have plans for dinner on the 25th with a friend and that is the only time I will eat out this month.”
Achievable - Cooking from home can taste better and reduce costs. I will just need to set aside a little extra time to cook and clean.
Relevant - I have been spending too much money on eating out and want to reduce my spending.
Time-bound - I will only eat out one time per month.
This may prove to be a solid outline for your goals and make sure that your goals are within reach. Making unrealistic goals may cause future stress and may not keep you engaged in reaching such a goal. Start small and build up some momentum towards even your largest of budgeting goals.
Are there basic budgeting guidelines to follow?
There are some basic budgeting guidelines that may be a great starting place for beginners. The very popular 50/30/20 rule is a breakdown of your income and what to do with your money. This rule advises people to save 20% of their income each and every month, which in turn leaves 50% for your basic needs and essentials such as housing and groceries etc, then leaving 30% of your income to be used as you please.
This is a solid rule that allows the budgeter to have a tighter grasp on their money and helps them to save for more meaningful future purchases or to simply have extra funds for an emergency. Many will spend without considering such events and will not be left with adequate funds to even do so. Where you make money and it is your money, the smartest thing you can do is to save. Many consumers and not consciously or mindfully spending.
Often, advertisers or marketers will work against you telling you about a new product that will "change your life" when often that is the last thing it will do. Some potential purchases may seem like a great idea when in reality you can very well do, without. That is not to say that some purchases may be necessary or at least necessary to you for your lifestyle but we still need to weed out the ones that are not.
Materialist items will never truly make you happy, or at least they won't the same way possible financial freedom may, where you do not have to worry about bills and you can simply live on your own terms. Regardless of your income it is very important to be a conscious consumer and to think of purchases and potentially do your research as if a purchase is necessary or right for you.
Are there finance tutors near me?
If budgeting is something you just can’t get your head around it could be best to look into hiring a finance tutor. Luckily, with Superprof we have streamlined the process of finding finance tutors for you and we offer lessons at a reasonable price that could fit any budget!
Superprof tutors are experts in their field and are excited to help you learn. There are millions of tutors available through Superprof and we are confident that you will find whatever it is you are looking for.
Simply find a tutor in your area or find an online finance tutor, have a look at their credentials and choose a tutor based on your own criteria. Next all you have to do is send them a message and find a time that works for you both!
Tutors are great because they allow for more flexibility with everyone's changing schedules and a private finance teacher is more available to you for your specific needs and areas of interest.
With Superprof we allow you to take your first lesson at no cost to make sure that learning with Superprof is right for you! Try it out to meet your budgeting goals today!
Closing
Creating a budget that works for you involves considering your expenses, tracking your spending habits, setting goals, and following basic budgeting guidelines. Basic expenses include housing, utilities, transportation, groceries, debt, and memberships.
Tracking your spending and making necessary changes helps you stay on track. Use budgeting apps like Mint, YNAB, or Quicken to monitor your expenses. Set SMART goals that are specific, measurable, attainable, realistic, and timely. Basic budgeting guidelines like the 50/30/20 rule suggest saving 20% of your income, allocating 50% to basic needs, and using 30% for personal expenses.
Being a conscious consumer and prioritizing financial freedom over material possessions leads to greater long-term happiness and financial stability.
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