Learning how to manage money can seem intimidating at first glance, especially when you consider the long and winding road to retirement. Establishing financial goals, making tough budgeting decisions and learning how to navigate the finance world are all integral parts of the process. Luckily, there are a few tips and tricks you can use to make your financial planning journey a whole lot easier.
Consider this guide as your personal finance planner, composed of valuable tips on everything from how to budget and save money to learning stocks for beginners and finding the best IRA account.
If you’re wondering how to budget and save money, you may be relieved to know that it’s not as hard as it seems. You can think of a budget as a roadmap to financial health – stick to the path, and you can be sure to reach your destination.
Creating a budget planner is the key to successfully saving money. In the age of electronic payments and transactions, tracking your spending habits is a bit trickier. A swipe for coffee here, a mobile payment for dinner there and suddenly half of your monthly income has vanished into thin air.
So, how do you manage money using a budget, and how do you create one?
Budgeting can be broken down into the following simple steps:
1. Calculate your total monthly income. Knowing how to budget and save money starts by analyzing your income and expenses. If you get regular paychecks, add up the total amount of money you earn after taxes. If your income changes frequently or you have a seasonal job, use income from one of your lowest-earning months. This will help you avoid overestimating your income.
2. Calculate your total monthly expenses. Consider all of the following common expenses:
- Rent
- Mortgage
- Utilities, including cable and WIFI
- Food
- Credit card bills
- Student loan bills
- Car payments and car insurance
- Health insurance
- Transportation and travel
3. Choose a budget. A good budget planner tip is to follow the 50/30/20 rule, which allots 50% of your income for “essential” expenses, 30% of your income for “wants” and 20% for savings.
4. Analyze your spending habits. Consider using a budget spreadsheet to divide your expenses into the categories listed above. It may help to color coordinate the worksheet so you can visualize your spending habits.
Some budgeting worksheets can help you adjust your spending to stick with the 50/30/20 rule. If, after entering all your expenses, you realize you are not putting any money toward your savings, you may need to make some adjustments.
When it comes to learning how to budget and save money, you are not limited to using the 50/30/20 rule. There are a few other budgeting techniques to consider, such as the envelope technique.
With this budgeting method, you divide cash into several paper envelopes per expense category that you are allowing yourself to spend each month. When the cash is gone, you’ll know it’s time to stop spending money in that given category.
Your budget planner is not permanent. You may find that you need to adjust your budget frequently to reflect changes in your circumstances, such as getting a new job, moving to another state or having children.Now that you know how to budget and save money, it’s time to learn how to utilize your savings to its full potential.
By Admin –
