Some things are worth doing every day. Good examples of such things include staying physically healthy, like drinking plenty of water, brushing our teeth every day, and simply being active. For these reasons, why is it so hard for people to exercise similar daily care when it comes to finances? Well, if your goal is to be smart with your financial decision and care, below are a few simple everyday things you can do when budgeting.
- Start Creating Your Budget Before The New Month Begins
While planning your monthly budget, it is very important to plan ahead. Therefore, a week before the month begins, sit down and start planning for the next month. Include everything you or your family needs, such as month’s activities, expenses, savings, and others. remember, some of these things will vary every month. For example, you may have a vet appointment or a road trip planned, but the next you will not. Use a budgeting app to break down your monthly income to allocate funds to different things such as expenses, saving, unexpected expenses.
- Practice Budgeting To Zero
What does budgeting to zero mean? Well, it simply means tracking down every dollar you earn and giving each a place within your budget until you have none to spare. For example, assuming that you earn £2,000 every month; after budgeting for monthly expenses, saving contributions, investments, unexpected expenses, trips, and everything else, you should not be left with any amount to spare. This is a great technique to know where your money is going and also give every amount you earn a purpose.
- Take Advantage Of Budgeting Tools
Just like in everything else, budgeting also demands using the right tools. The tools you use will guarantee success from the start. One example of such a tool is a budgeting app like Mint. Another example is an app that can keep track of the money you spend on shopping or healthcare. Why use these apps? Well, these are budgeting tools that will help you visualize your expenses, warn you when you are overspending, or remind you of your goals and bills.
- Differentiate Needs Vs. Wants
Needs (also known as Basic Needs) is defined as anything important to guarantee your survival (it can be physical, mental, and financial). Examples include rent, food, water, clothing, and even debt repayment. Needs should always take first place in your budget. Apps like Mint come with online budget calculators to help you calculate and take account of every Need.
Wants are those things that you wish to own, but you can still survive without. Experts recommend using the 50/20/30 rule when budgeting. 50% should cater to your Needs, 20% should be saved (savings), and 30% should go to wants.
- Organise Your Bills And Receipts Well
It is important to keep records in case something arises. For example, while budgeting, you may need to refer back to a particular bill or in case of disputes. Receipts also come in handy when paying for taxes. Of course, there are many ways you can store and organize your bills and receipts, such as using a hanging file, expandable folders, and more. The way you organize these documents should make sense to you.
- Keep Different Accounts Separate
In the past, you may have succeeded using multiple checking accounts to keep things organized. However, if you do not keep each account separate you may end up losing track of your finances. For example, you may open a checking account for only fixed expenses like car payments, rents, and others. Doing this will make it easy for you to see the amount you spend every month on those expenses, which in turn helps you create a good budget plan.
- Always Prioritize Debt Repayments
Although it is always tempting to begin saving for holidays or financing a car; but it is wise to keep those ideas away and focus on repaying debts. Remember, paying debt does help save you money on interests. Paying off guaranteed payday loans will help to build your credit score.