Your best friend’s birthday is coming up and you need to buy them a gift but your bank balance’s running on fumes and payday is still a week away.
Does this sound familiar?
No matter how much you earn or save, there are times when you are left scratching your head in bewilderment over where all your salary went. Whether you are a penny-wise person who buys only the essentials and avoids overspending (but still runs out of money before the end of the month) or a compulsive shopper who regrets their purchases later, the only way to break out of the dilemma is to carefully set out a proper budget.
Getting your finances organized is important so that you can meet the monthly expenditure and still save enough for a rainy day. And if you are wondering how to set a personal budget that won’t blow out of proportions, you have come to the right place!
Follow these personal budgeting tips to manage your finances like a pro.
You might be a whiz at mental math but budgeting cannot be done in the air. Buy a proper budget planner, download a dedicated app or use the inbuilt spreadsheet app on your mobile or computer, but get every income and expenditure in black and white.
Identify the Sources
The next thing that you need to do in order to create a successful budget is to get a definite idea of how much money you have coming in each month. Besides your salary, list down any other sources of income that you might have. This includes investment or interest income, child support income, parent’s pension and so on.
List Down the Expenses
In a separate column, jot down all your typical or definite monthly expenses. This includes gas, electricity and water bills, mortgage/ rent payments, car loans, insurances, children’s school fees, etc.
Calculate and Adjust
Of course, your expenses don’t end there. Besides the definite bills, you need money for groceries, household repairs, personal expenditure, and any other unexpected events that might come up.
For this, you need to have a clear idea of your disposable income. To calculate it, subtract your definite expenses from the total income. The amount that is leftover is disposable income.
See what’s eating up your bank balance
A Little hole can drain out a large bucket over time. The same is the case with money. Pay attention to any extra, seemingly ‘small’ expenses that can easily be avoided. For example, if you are paying for a cell phone plan that offers more data than you actually require, consider revising the package so that you only pay for what you use. Are you paying for clubs or memberships that you don’t really avail? Well, it’s time to cancel them if you want to create a successful budget.
A minute a day goes a long way
Ask any finance expert how they manage their money and you will find that there is one thing that is common to all – they keep a vigilant eye on their daily expenses.
All it takes is a minute at most. At the end of the day, check how much you spent and on what. Doing so on a daily basis will help you keep track of how close you are following your outlined budget and thus, help you adjust before it’s too late.
Follow these personal budgeting tips and you will no longer face those embarrassing moments of having an empty wallet or your credit card being declined at the store.