The main reason for budgeting is to be able to save. So you can afford your lifestyle when you retire or when you can no longer work. So it’s important to have more money coming in than going out to be able so to save.
Paying yourself first
The purpose of budgeting is to save for the future without compromising our current lifestyle. Paying yourself first means each month you pay yourself a percentage of your income and save it towards your financial future before paying any other bills.
Knowing what your financial goal is will help you determine how much percent of your income you want to save/invest towards your goal.
Only count your Net income
Your net income is your after-tax income. When budgeting, only count your after-tax income as this is what you have available for you to spend.
Keep a detailed record of all your spending
To understand if your budgeting is working for you, you need to keep an accurate record of all your spending. Be sure to include every penny you spend in your budget. Record your spending as they happen so it’s easy to keep track of and help you so you don’t forget to track.
Save for expenses that are predictable
For example family vacations, birthdays, valentine’s day, Christmas e.t.c
These events probably happen at the same time every year or at least you know they happen at some point every year. Include them in your budget and save towards them every month.
Consistency is Important
When trying to achieve financial freedom, budgeting is very important but consistency plays a significant role in successful budgeting. Make your budget every month and get in the habit of striking with your budget. Avoid skipping your monthly budget due to being busy or forgetting to get to it. Going one month without budgeting can lead to no more budgeting due to procrastination.
Budgeting requires Discipline
Having your financial goals at the back of your mind will help you in this area. It is important to stick with your budget each month.
Evaluate Your Budget Regularly
As time goes on people’s situation change. Be sure to review and update your budget as your life changes. For example, Family growth will affect your budget as this event increase your spending.
Also, as you try different budgeting methods you will find what works best for your situation. As you get better at budgeting you may realize some unnecessary spending like a gym membership, cable, and subscriptions that you don’t use. reviewing your budget will help you in deciding what not to spend money on.
Final Thought
These tips will help you be a better budgeter. Always remember that budgeting is a process, so try to celebrate your win
