The Best Beginner’s Guide to Budgeting!
Implementing a budget into your daily life is one of the best ways to reach your financial goals. However, determining this budget and sticking to it can prove to be more difficult! Just like you, we love saving so we wanted to share these four easy steps that will help you budget!
It’s okay if you’ve never stuck to budget before this is the Best Beginner's Guide to Budgeting! Simply follow these four steps and you’ll be on your way to meeting your financial goals:
- Track Your Monthly Income- This step is certainly the most important. If you don’t know how much you make you’ll never know how much you can spend. Total all of your monthly incomes to determine a starting point. This way you have a number to subtract expenses from!
- Track Expenses- Next, add up all of your fixed monthly expenses like bills and living costs. These expenses are the ones that will mostly stay the same from month to month like rent, groceries utilities. These are the items you can’t live without.
- Set Financial Goals- To achieve what you’re after, you have to know what you would like to accomplish! Determine your financial goal so that you have something to work for. Also, once you choose your goal you will be able to tell how much you need to budget in order to reach it. Examples of goals that you can budget for are saving for a downpayment on a house, funding a retirement account or getting out of debt.
- Determine Discretionary Expenses- We all spend money on nonessentials but how much can you really afford? Discretionary expenses are things like entertainment, clothing, vacations or gifts. These things are nice but not necessary!
Now that you know how much money you make, how much money you spend and how much money you want to save it’s time to perfect the numbers. Take your monthly income and subtract your fixed monthly expenses. Using this number, set a realistic budgeting goal. Now, start to think of this goal as another expense. Each month you have to pay your rent and electricity but you also have to put money towards your house down payment fund. The money you have left can be used on discretionary expenses.
Congratulations, you just created your budget! Now put it in place and reach your goals!