Keeping our finances in order is vital to ensure that we can keep our credit scores in good standing and allow us to buy the things we want and need in life. If you’re having trouble balancing your finances and want to change your ways, these are the best ways to do it.
Although it’s a slow process, it’s the easiest way to create good spending behaviors.
Look At How Much You’re Currently Making
Take a look at how much money you’re making after taxes. This should include everything, from your main job, any side jobs you do, and any child support or other sources of money you have every month. If you’re a freelancer or your taxes aren’t taken from your paycheck, you need to set aside a fifth of every pay automatically to ensure you don’t have to scramble around tax time.
Look At How Much You’re Currently Spending
Go through your finances, and figure out how much money you’re spending every month. Set up finance automation to keep you on track. For some, it may be tempting to simply say that you’re paying exactly as much as you’re making, but it’s important to break it down further than that. Set your spending into categories like entertainment, rent, transit, and food, and then break it down from there. If you spend fifty dollars a month on makeup, include that in your list of things that you buy. Be honest with yourself.
Create A Reasonable Budget
Create a budget of what you would like to spend on each of these. Don’t cut back too far; this might make it harder for you to save money in the long run. Instead, be kind to yourself and tighten the budget a little bit. This could mean spending only $100 instead of the $150 you spent on movie nights the month before or cutting back on ordering food.
Ensure that your vital spending like rent, food, and electricity are all at the top of your budget and covered first. Groceries and eating out should be two different categories since one is far more cost-effective.
Set aside a part of your budget strictly for saving money so that you can start saving money soon.
Use The Budget For A Month
After you create your budget, put it to use for a month. Write down how much you spend in each portion of your life, and pay attention if you find yourself struggling with certain parts of the budget. If you notice you spent far more in one portion than you budgeted for, mark that down.
Review And Make Any Needed Changes
After your month of using the budget, please review it and decide where you need to make changes. Much like a house payment calculator, this budget is only as good as the information you put into it. Don’t lie to yourself, be honest and write down what you’re spending and what you would rather be spending. If some areas of your budget need more wiggle room, make room for them. Don’t starve yourself of fun; just ensure that you’re not spending recklessly.
