Many amongst us do not really like budgeting and it usually goes overlooked. However, there is no rocket science involved and all you need to do is to take a look at what earn and what you spend and decide things that matter the most to you. Once your goals have been set, it’s your budget that will help you reach the final destination. Here are some tips that you should follow for budgeting like a professional.
- Develop safety buffer
Basically, the key for successfully managing your money is putting some funds aside for the rainy day. It will ensure that your financial stress is minimized during the bad times. Make sure that you allow for any unexpected debts as well as emergencies like family ailments, breakage or loss of possessions, etc. But what exactly should you put aside?
- For singles as well as couples, the emergency fund should be the amount equaling your take-home income for a couple of months.
- For those who have young families, the emergency fund must equal their take-home income for 3 months.
- Keep track of all the expenditures
It takes most of your time. You must honestly tell yourself where exactly you spend your money. Therefore, write down all the spending of yours for a month to start with. It’s a tricky part as you can easily forget where and when the debit card was swiped. But still, it is of utmost importance to track whatever you spend in a month. Take the simplest approach and track your expenses on a notebook. It’s not just important that the amount is tracked down, but it is also of utmost importance to know for what the money was actually spent.
- Go with a plan
It is important to evaluate which areas should you be spending your money on and where you should actually be spending it. Water, electricity, food, and housing payment are the essentials and you can’t really avoid spending on any of these things. What you should actually be analyzing are extras like morning coffee, dining out, impulse buys when you hit any major store, etc. It is advised to make a column with the heading goals and use it for mentioning where you should be spending your money. It will surely help you in saving your hard earned money and paying off your debts, if any.