Tips on How to Budget Your Money and Get the Best Out of It

Tips on How to Budget Your Money and Get the Best Out of It

By learning more about it and going through the tips we suggested, we know that you will be equipped and ensure that not only will you be able to pay for your expenses but you will have a bit of extra for you and your family. 

how to budget your money

Whenever we have any kind of income, one of the things we need to know is how to divide that income up to all sorts of bills and expenses that you may have.

Today, there are many expenses like house payments, electricity, water, gas, car loans, and the like that you need to take care of and any one of them can put get you in trouble if you’re not able to pay for them.

You need to ensure that the money you earn is enough to pay for those bills and leave some for yourself. How do you do that?

The answer is simple and it’s called a budget.

But what exactly is a budget?

Today, we’re going to look at how to budget your money and how you can maximize the money you earn and take care of all your responsibilities.

What Is a Budget?

A budget is a plan that you can use to determine what to do with every dollar you have.

It allows you to allocate each dollar to all of your expenses so that you can have a better view of what you are spending on what and if you have money to allocate for extra expenses.

The key here in how to budget is to understand the process and hopefully, this will help you work out how much money you are spending and how much money you can save. 

Where Do I Start?

To really understand how to budget, you need to understand what process is involved with doing that. Let me break it down to you.

What Is Your After-Tax Income

You need to figure out how much you actually earn after all deductions have been made.

People who receive a paycheck often already have deductions made to their income so you won’t need to worry about it.

If you have automatic deductions for a 401(k), savings, and health and life insurance then you need to add that back in for you to have a true picture of savings and spending.

Additional income such as gigs and side hustles often are not yet taxed so you need to reduce the amount with taxes and then the remaining amount is added to your total income. 

balancing budget rocks

Select a Budgeting Plan

You need to prepare yourself with what kind of plan you want to use so that you can learn how to budget and be able to take care of all your expenses and cover all your needs and maybe some wants as well.

You will probably want a plan that works to give you savings and an emergency fund for the future.

Track the Progress of Your Budget

Make sure to record all your spending and regularly update your budget to make sure you are keeping on track.

You can either use a spreadsheet or one of the many budgeting and savings tools online.

Automate Your Savings as Much as Possible

So that you don’t get sidetracked, automate the money that goes into savings as much as possible so that you can achieve your goals and as soon as it’s there, don’t touch it unless it’s an emergency.

Have an accountability partner and a support group to help you.

Check Your Budget From Time to Time as Needed

As your income and your expenses might change from time to time, you need to make adjustments to your budget.

Regularly check it and see where you are and make changes to it so that you can maximize it.

Try Out a Simple Budgeting Plan

how to budget your money

Once you have all the information you need to start making a simple budgeting plan.

If you want to learn how to budget at the start, you can follow the 50/30/20 method where you spend 50% of your income on necessities, 30% on your wants, and then the remaining 20% on savings and payment of debts.

The simplicity of this plan is that it’s easy to do and anyone can start doing it. 

Necessities

When we say necessities, we are talking about the things you need to survive and cannot live without. This includes the following:

  • House payments or Rent
  • Groceries
  • Water
  • Gas 
  • Electricity
  • Transportation allowance
  • Insurance
  • Loan payments
  • Possibly child care if no one can take care of your kid while at work

These are the most important to fulfill from your budget so make sure to allocate the largest amount of your income and so we recommend 50% here.

Should the amount overshoot the 50% mark, you may need to increase this and decrease the wants portion as necessary.

Wants

The Wants portion details expenses that are outside of your necessities but would like to include in your regular life.

This could mean trips to the salon, vacation, dining out, gifts, movies, you name it.

If it’s something that you don’t absolutely need but it’s nice to have, then it goes into this section.

Remember, however, that if you have larger necessities, you will need to cut that extra budget out of your wants section as it’s not as important as your needs.

Savings and Debt Repayment

Lastly, you will want to remember to put some of your money into savings and paying off debts.

You will always want to have some money in the future and one way to ensure that happens is that you are debt-free and have some money you kept safe for a rainy day.

You can also consider investing your savings so that it can also grow a profit. The idea is that you have money saved up for another day.

Now, one way to keep track of your budget is through a spreadsheet.

How Do You Make a Budget Spreadsheet?

how to budget your money

This is actually very easy.

All you need to do to learn how to make a budget spreadsheet is to start listing numbers.

You need to enter your total income, what kind of expenses you have and your allocation of funds on a spreadsheet like Excel.

You can then use those numbers to calculate how much money goes where with the use of simple math formulas like percentages.

Programs like excel actually come with templates you can use.

How Do You Keep a Budget?

One thing to remember on how do you keep a budget is that you need to regularly monitor the money coming in and out of your wallet.

Make sure to track not only changes in income or additional sources but if you make extra expenses.

Determine what kind of expenses are these and make adjustments to your budget as necessary.

How Do You Figure Out a Budget?

What’s first important is to make a financial assessment of your situation and you have to be honest about it.

Identify your total income as we discussed earlier as it is important to know if you have enough money for everything you are spending on.

Next, assess what exactly are some of the expenses that you have that you need or want and what can be cut down.

Once you have these numbers, you can then put them on the spreadsheet and see where you are at and what changes you need to make to your budget.

Remember that the budget is a guideline and not a hard and fast rule and so you need to be flexible as necessary.

By keeping this in mind, the answer to how do you figure out a budget becomes easy without question.

how to budget your money

Final Thoughts

Budgeting is definitely an important part of adult life and knowing how to budget your money is a real life skill.

By learning more about it and going through the tips we suggested, we know that you will be equipped and ensure that not only will you be able to pay for your expenses but you will have a bit of extra for you and your family. 

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Author: John Benares

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