Typically, when people hear the word “budget,” they think of it negatively. The word “budget” is really just another way to say you are planning out your money. The concept of budgeting is not to take your freedom away when it comes to spending money; it is merely a way to give you more freedom with your money. You are probably wondering how budgeting can help you, so we have complied a list of the BEST practices for budgeting. Keep reading!
- Set Up a Schedule
Instead of just having things withdrawn from your account on random days, come up with a calendar and schedule out your payments. Most bill payment portals have autopay features these days, so it does not hurt to set your bills up on specific days. This way, you will be able to know what to expect each day, week and month.
- Put Some Money Aside
Planning out every single thing you pay for is quite hard to do. What if you come across a new restaurant and want to try it out? Or, how about a new pair of shoes? Just because you are “budgeting” does not mean you cannot set aside some buffer money in the budget. This money will be used for things that come up. If it’s an unexpected oil change, you will have money in your budget for it.
- Download an App
There are so many budgeting apps that are great starting points if you are new to budgeting. If you have a smartphone, try downloading a budgeting app to track your spending! We recommend trying Mint and You Need A Budget (YNAB).
- Try the 50/30/20 Method
The 50/30/20 method goes like this: 50% of your income goes towards your needs. 30% of your income goes towards your wants. 20% of your income goes towards your savings and debt. To use this method, you will need to properly separate your wants from needs. Focus on what is deemed as essential—groceries, medications, housing, gas cost, etc.
- Review Your Budget Often
Making sure you are on top of your budget and spending is key to getting in the habit of budgeting overall. As each month will differ, you will want to review each month (or bi-weekly) with your financial planner. It is best to check in on your budget to deal with things that come up unexpectedly and fit them into your budget.
While there are numerous ways to plan a budget, these five tips are the best practices for setting up a budget in 2020. Our financial planning expertise is geared towards helping you meet your goals, and setting up a budget is a great starting place!
If you have any questions regarding personal finance and budgeting, set up a call with us today at (713) 527-8998! We would be happy to help you set up your monthly budget and keep you organized!