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A budget is your plan on how you'll spend your money. Every budget is personal but you should ensure it's helping you to spend less than you earn, not incur excessive debt and plan for a wealthier future.
There's no rocket science to budgeting. We can get it wrong (spending more than we earn) or not do it at all.
Here's a guideline on how to budget.
1. Use a Budgeting sheet or app:
There are plenty of free templates out there to get you started. This is the simplest form and allows for a lot of customisation but if you want something more automated, check out these apps:
These apps can connect straight to your bank account. By doing this you don't need to think about it. Set your budgets on the app and get started.
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2. Track your income and expenses:
Once you've picked what you are going to use, you then need to track the money coming in and the money going out. Everything from your rent or mortgages, down to your monthly subscriptions from Netflix, everything needs to be accounted for. This isn't so that you limit yourself, it's so that you can be free.By doing this it really shows you how much you have left over.
3. Cut down on unnecessary expenses:
What are you paying for that could save you money?
- Unused gym membership?
- Subscriptions that you have forgotten about?
- Weekly takeouts or excessive spending on food?
By looking through your expenses you can find where you're spending the most money. For me, this was definitely food and subscriptions!
I didn't realise how much I was spending by using by debit cards and spending unreasonably. My budget helped to control this.
4. Pay yourself first!
Now that you have a budget and cut down your expenses, pay yourself before anything else.
Whatever money you have left over after your necessary bills, should be going to increasing your wealth.
This could be building an emergency fund, clearing debt or investing. Do something with your money that will help your future. This could even be setting aside money to improve your skills.
An investment in yourself is the best investment you can make.
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5. Stick to your budget:
This one can be quite difficult but if you've done it properly it will make it a lot easier.
Be honest with yourself about what you spend and then work around that. If you want to spend $50 a week on eating out, then go for it!
The key is to limit yourself to just $50.
The same with buying anything else.Leave room for it in your budget and you're more likely to stick to it.
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Conclusion:
Budgeting is not something that should restrict your spending.
It's there for you to build wealth and control your finances.
Learn to budget well and it can do wonders for your wallet!
The Essentials to Budgeting: Easy ways to stick to your budget
Reviewed by Finance Matters
on
January 25, 2022
Rating:
Reviewed by Finance Matters
on
January 25, 2022
Rating:
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