Budgeting for Beginners
Budgeting might seem too big of a challenge to tackle, yet it could not be more important. You may feel overwhelmed with all your expenses, and feel like you would rather just sweep things under the rug. That’s how you get yourself buried in debt fast.
Forming the habit of budgeting is so important. That’s why today we are sharing our top tips on how to budget for beginners.
Determine your Income
The first step in budgeting is determining what you currently have to spend. This means you are determining your income that you have coming in. This could be from your job or even a side hustle.
Determine your Expenses
The next step after you determine how much you have to spend is to determine what you are going to be spending. During this step, gather and total all your monthly expenses. On this list, include things like housing expenses, food, transportation, subscriptions, etc. Make sure you are not missing anything that you spend money on regularly.
Follow the 50-30-20 Rule
The 50-30-20 rule is a basic guide that shows you how to create your budget. After taxes, divide your income into different categories. You should have 50% of your income go to your fixed expenses. The other half should go into savings and wants. You should have 20% of your income go into savings, and the other 30% should go towards your wants.
This rule is a great tool that shows you a blueprint of how to budget. You do not have to follow it exactly though. Feel free to switch it up and make it your own. You may spend only 40% of your income on your fixed costs. If this is the case, then maybe use that extra 10% towards your savings making it come out to 30%.
Tracking what you spend helps you become aware of how much you are spending on average. This can also help you notice if something seems a little bit off. Some months you might spend a lot more and some months you might spend a lot less. Tracking can help you see where you are able to save and what areas you are able to spend a little more in.
Do What Works for You
When it comes to creating and maintaining your budget, make sure you are doing what works for you personally. You may find it easier to have your budget online, or maybe you are a paper and pen type of person. There are so many apps out there that can help you track your spending as well. Whatever the method, just make sure you are doing something that works for you, and that you know you will stick to. Remember, consistency is key!