Your Go-to Tips And Tricks For Beginners – No matter where you are in life, a budget is important to understand and direct where your money goes. The right budget can help you achieve your financial goals and improve your quality of life. This is especially true if, like me, you are raising a family that depends on you.
Creating a realistic budgeting strategy is an important part of better managing your finances. Fortunately, even if you have zero budgeting experience, managing your money doesn’t have to be complicated. I share 15 basic budgeting tips that can help you build an effective budgeting strategy.
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Underestimating your income when budgeting is an easy way to set yourself up for success. When you underestimate the amount of money you earn each month, you are more likely to spend less and be left with a surplus.
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Just like underestimating your income, you should also overestimate your expenses. It’s impossible to predict exactly how much you’ll spend each month. Estimating the amount too high ensures that there won’t be any surprises.
Involving others in your budgeting plan is a great way to keep yourself accountable. Ideally, you will involve someone who will help you achieve your goals, such as your spouse or family member.
No matter how much time and effort you put into planning, sometimes we receive unexpected expenses. These expenses, such as trips to the emergency room or home repairs, are difficult to predict. For this reason, it is important to include an emergency fund in your budget. How much you want to set aside for your emergency savings is up to you.
The ability to distinguish between needs and wants is important for money management. A need is anything that plays an important role in your physical, mental and financial well-being. Expenses like food, your mortgage, utilities and debt repayments are necessities. On the other hand, things that are not important, or things that you can live without, are considered wants.
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The ability to separate your needs from your wants allows you to follow the popular 50/30/20 budgeting rule. Basically, 50 percent of your income is used for essentials, 30 percent can be spent on your necessities, and 20 percent is used for savings. I’ll explore some other budgeting methods later in this post.
To create and stick to a budget effectively, you need to record every expense. This means writing down or keeping track of every dollar you spend and what you spend it on. People often overlook small expenses, but those small charges add up.
The right budgeting tools can help you succeed. Budgeting apps are great for tracking your expenses and keeping your financial information organized.
Mint is a popular and top-rated FREE app with a bunch of budgeting tools. The app syncs your checking and savings accounts, credit cards, loans, investments and bills, then tracks your spending. It puts your expenses into budget categories, which you can personalize. You can also set a limit for each category and Mint will notify you when you’re close to your limit.
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YNAB, an acronym for You Need A Budget, is another top-rated app that helps users plan ahead for their finances. Instead of tracking your past transactions, YNAB uses a zero-based budgeting system to allocate every dollar you bring in.
YNAB allows you to sync your checking and savings accounts, credit cards and loans. It costs $14.99 per month or $99 per year.
Goodbudget is a useful application for planning your finances. It uses the envelope budgeting technique by allocating your monthly income to specific expense categories.
Unlike the other two apps, Goodbudget doesn’t connect to your bank account. Instead, you manually add your account balance, as well as total debt, income and cash.
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With the free version of Goodbudget, you get one account, two devices and a limited number of envelopes. The paid version, Goodbudget Plus, gives you unlimited envelopes and accounts, up to five devices and more. Goodbudget Plus is $8 per month or $70 per year.
Keeping your financial records, such as bills and receipts, organized is important. You never know when you might need to look back at a bill to dispute it or refer to a receipt for tax purposes. You can use physical files and sort your records accordingly, or you can file everything electronically.
Use this as an opportunity to review your spending habits. Are there expenses you can reduce or eliminate? Maybe you pay for a streaming service you don’t use or you buy your lunch every day instead of packing a lunch. Take the time to examine where your money is going and make adjustments where you can.
Comparison shopping is a great way to save money. Basically, you compare the product you buy and the service you use, with other products available. This way, you can make more informed purchasing decisions and potentially reduce your expenses.
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Keep in mind, cheaper is not always better. An important part of comparison shopping is looking at the product or service as a whole to make sure you’re getting the best deal.
Credit cards can be a great financial tool but they should be used with caution. Limit the number of credit cards you use or get rid of them entirely. Even if you’ve talked about paying off your credit card balance each month, the amount of interest spent on credit card transactions has the potential to forever leave you trying to keep up.
To be successful, you need to create a budget that fits your life, values and goals. The right budgeting method should make your life easier, help you move forward and push you towards your financial goals.
With the zero-based budgeting method, you allocate every dollar earned. This method was popularized by Dave Ramsey. According to the tagline for this method, you want to “give every dollar a job.” However, that doesn’t mean you actually spend every dollar, it just means every dollar counts.
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Some of your money will be allocated to bills such as rent and utilities, while the rest will be allocated to your retirement or emergency fund. A portion of your earnings will go into a savings account, 401K, Roth IRA, etc.
And part of your money you put to work to pay your electric bill or mortgage and the other part you put to work to fund your retirement or emergency fund. Every dollar counts, which means that when every dollar is put into a category, you’re at zero.
With this method, your money is allocated to separate categories. You then put the cash into an envelope labeled for each category. It’s an easy way to track your spending and avoid going over your budget.
For example, if your rent is $1,200, you would withdraw $1,200 in cash from your bank account and place it in an envelope you label “rent.”
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Don’t like budgets. It doesn’t require any work and you don’t have to keep track of your expenses. Instead, you’re simply automating your savings to make sure there’s enough money in your checking account to cover all your bills. You can make it easier by automating bill payments whenever possible.
With this method, 60% of your income is used for “committed expenses” such as mortgage, insurance, car payments, food, etc. All your bills that need to be paid each month fall into this category.
Budgeting requires constant effort to succeed. Tracking your progress lets you see how far you’ve come, as well as the goals you still want to achieve. It also allows you to make changes, as needed, to your budgeting method so that it fits your current lifestyle and financial goals.
Typically, your expenses will be divided into two categories: fixed expenses and variable expenses. Understanding the difference can help you figure out your financial priorities and cut down on unnecessary expenses.
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Fixed expenses are usually about the same each month. This includes things like rent, insurance and your cell phone bill.
Variable expenses are costs over which you have more control. These types of expenses change each month and include things like entertainment, groceries, clothing, etc.
Unnecessary expenses should be avoided as much as possible when you are on a budget. Whether you’re saving for retirement or trying to pay off student loans, those things should take precedence over unnecessary costs like entertainment and eating out. While you shouldn’t make yourself miserable to save money, you should prioritize saving more and spending less.
Whether you’re a financial novice or expert, these basic budgeting tips can significantly improve your quality of life.
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Financial stress can affect your quality of life. The easiest way to deal with financial stress is to make and stick to a budget. I hope these basic budgeting tips help you feel more in control of your financial situation and lighten your burden. You are not alone. The truth is, most people aren’t taught how to take care of their skin in school or at home—and if they are, they don’t always remember what they learn as they get older.
I know what it’s like to have sensitive skin that breaks out easily and
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