BUDGETING THAT WORKS FOR YOU
Budgeting is a challenging part of our life. It involves self-control and motivation. Human as we are, we may find ourselves struggling to stick to our budget. But it doesn’t necessarily mean that you are bad at budgeting. It could be that you haven’t found the best way to make your budget work for you yet.
Here are some tips to make your budget work for you:
1. List Down Your Monthly Income
Using a piece of paper, list down all your income for the month. If you have a fixed income, this will be fairly easy. If you are like me that does freelancing and is dependent on how many projects I get to work with every month, things could be a little more complicated. In this case, just list down the minimum amount that you will be getting for the month (after doing freelancing for a long time, you should have an idea of how much money you can actually earn every month). Just make sure that the amount is reliable because it could cause you trouble if you overestimate your income and then realize later on that you actually don’t have that amount of money.
2. List Down Your Fixed Monthly Expenses
List down all your monthly fixed expenses. This could be your monthly rent, car payment, telephone bills, internet bills, etc. These bills are usually recurring and have the same amount.
3. List Down Your Fluid Expenses
These are expenses that change every month. This could be your electricity bill, water bill, groceries, gas, etc. List down your average monthly spend on these starting from the most important expense. It’s important that you know your expenses as accurately as possible so that you will know where to reassess later on. Also, make room for miscellaneous expenses (buying presents, school contributions, etc.).
4. Plan for Future Expenses
It’s not like we have the same events happening to us every month, right? And there are months where we have to pay something for a certain thing. For example, a car maintenance, home renovation, home repairs, etc.
You can’t tell whether your car is going to suddenly stop working. It’s not ideal to use the money for your car loan to pay for a car repair because you have no money, right?
This is where the “setting money aside” comes in handy. For each month, make sure to stash out some money even as little as $5 for “Emergency Fund”. You’ll thank yourself in the future.
The difference between your income and total expenses for the month can be added to this fund as well or create a separate savings fund for that.
5. Reassess Your Budget
Your expenses could go over your income without realizing at first. This normally happens to some people. This is precisely the reason why budgeting is important.
Once this happens to you, try to reassess your budget. Go over your list and check where you can make some cuts. Cut down some expenses that are not as important. In your fluid expenses, I told you to list them down according to their importance. Start from the bottom-up to see if you could squish the budget but still live comfortably.
You can try to minimize your electricity usage, save up on gas (try to walk/commute on short distance trips), budget your groceries, etc.
6. Keep Track
Budgeting should also involve tracking as it will not work if you’re not on schedule.
Our income comes in at certain dates and so does our bills are paid at certain dates. You must make sure that you have your money right before your bill is due.
A great way to make sure that you do not miss your dues is to plot down in a calendar the dates on when you will be getting your income and when your expenses are due.
Make your budget right for you and be contented. Don’t try to overspend on things or buy things without having much thought about it. You could be in a department store and a sales lady approaches you giving you a discount and end up buying it without thinking of the consequences. Make sure that you stick to your budget and goals.