Ways to Better Your Monthly Budget
For those looking to better their financial situation and budgeting skills, you’re probably revisiting your current budget and seeing what you can change. Of course, it’s not always obvious which aspects of your budget should be adjusted. In addition, everyone’s budget will look different based on unique income and expenses. How do you improve your current personal budget? Here are a few things you should take note of.
Consider the 50/30/20 Budget Rule
If you haven’t yet created a budget, or would like to restructure your current budget, the 50/30/20 budget rule is a popular and useful guideline to use. With this rule, you should apply 50% of your income towards essentials, 30% towards wants, and 20% towards your financial future, such as lowering debt or adding to your savings account.
Keep Your Budget Flexible
While strictly sticking to a budget can help you save money, it’s just not realistic. For instance, you likely spend more money around certain occasions, such as birthdays, holidays, and anniversaries. Perhaps you have finished paying off a loan or need to factor a new one in. Instead of being very strict about your monthly budget, you should keep it flexible and open to adjustments. With that in mind, it’s important to maintain good discipline over any adjustments made so you don’t create a financial burden on yourself later. For example, if you need an extra $100 two months from now, try keeping costs lower now so you can stay on track after the expensive month is over.
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Track and Review Your Spending Habits
To know which adjustments you need to make, it’s a good idea to track and review your recent spending habits. Is there something that you’re paying for that you don’t need anymore? Are you spending a lot on a certain category, like entertainment or food? Recording every transaction and allocating each purchase in different categories can help you see where you can cut costs now and in the future.
Worrying about money too much can cause some negative psychological effects. Remember to stay positive and don’t let the stress get to you. Also, if you are struggling with financing, know that budgeting has a learning curve and you are not alone. With some dedication and discipline, you will be on your way to completing your financial goals.
[ READ MORE: How to Teach Kids About Money Handling ]