Around 56% of Americans are unable to cover an unexpected $1,000 bill with savings, which shows how ineffective our budgeting is.
Budgeting can feel overwhelming but when you take tiny steps, you’ll enjoy peace of mind and won’t need to sacrifice your quality of life. But it’s important to know what to do, otherwise, your efforts will be wasted. Perhaps you’re currently struggling to budget and you’re looking for inspiration.
Sounds like you? Don’t worry; we’ve got your back. Here are three budgeting tips to try.
1. Know What You’re Working With
One of the most essential steps for budgeting is knowing your current financial situation. To start, list your income and expenses such as rent or mortgage, utility bills, and transportation. Then, subtract these costs from your salary to know what you’re working with.
You’ll either have extra which can you can funnel into an emergency fund or put towards a larger expense like a vehicle repair. Don’t worry if the number is negative, it simply means you must reduce your spending or find another revenue stream.
If budgeting feels overwhelming, break down your needs and wants. The former includes essentials such as groceries and housing while the former is less urgent. But this doesn’t always mean it’s not important, this could include paying off debt or saving for retirement.
The key is achieving a balance and spotting poor spending habits such as buying too many clothes every month.
2. Consistently Track Your Finances
On your quest to learn how to budget, tracking your finances is crucial. Download your bank’s app where you can monitor how much you’re spending and what you’re buying. Note, being accountable makes it easier to stay atop your budget and prevent overspending.
And if you’re looking for budget tips, use an online budgeting planner as it helps you achieve your financial goals.
3. Try Different Budgeting Methods
Out of all the budgeting tips, experimenting with different methods is the most underrated. This is because there isn’t a one-size-fits-all approach so take time finding a system that works with your lifestyle.
A popular method is the 50-20-30 method. To do this, you put 50% of your finances on your needs, 20% on savings, and 30% on wants. The beauty is this technique is easy to maintain and it’s less restrictive.
You could also take the cash-only approach, otherwise known as envelope budgeting. This is where you withdraw your salary and divide it into envelopes that say “Groceries” or “Utilities”. Many people love this method as it stops you from overspending and if you save from a particular envelope, you can funnel the cash into a new one.
Try These Budgeting Tips Today
Hopefully, after reading this article, you’ll try these budgeting tips.
There are many ways to make budgeting easier such as breaking down your finances and tracking your spending to prevent falling into debt. You should also experiment with different budgeting methods until you find one that works with you. Good luck!
Found this article helpful? Great! Then check out the rest of our blog for more tips and tricks.