For some people who aren’t used to tracking expenses, a budget can be a daunting concept. However, the truth is that budgeting is just a plan that you can use to make sure that you’re not over-spending in any area of your life. With the right budget to guide you, it’s possible to reduce your monthly expenses significantly and get more out of your money.
The great thing about budgeting is that there’s no one-size-fits-all strategy. If you find that the initial plan you try doesn’t work for your personal finance routine, then you can always look at switching to something else. At the same time, budgets come in a wide variety of scales and complexities, depending on what you want to accomplish.
Choosing the Right Budget
Often, the easiest way to start budgeting if you don’t have a lot of experience with personal finance management is to use something called the “anti-budget.” Basically, instead of tracking every expense, you make sure that you have all of your bills ready to be paid by direct debit on the day that you get your monthly income.
Once your bills are paid, you can also set up a direct debit to send a small portion of your money from your income into a separate savings account where you can see or use it. This will give you not only a place where you can save cash for the future, but also a safety net that you can turn to if something goes wrong. When all your must-have expenses are already accounted for, the rest of the cash in your bank is yours to use as you see fit – just remember to think about things like food expenses and haircuts that wouldn’t be paid for by direct debit.
If you need something with a little more structure, there are more direct budgeting solutions out there, and each comes with its own strategy. For instance, you might use a detailed budgeting worksheet downloaded onto your computer to help you give a purpose to every dollar you earn. On the other hand, you might try something simple like the 50/30/20 budget. Here, you dedicate 50% of your cash to bills, 30% to wants, and 20% to savings.
Where to Get Started with Budgeting
A budget might take some getting used to at first, but at the end of the day, it’s worth remembering that budgets are just tools that you can use to get more control over your cash. With a budget to work with, you can be more conscious of how you’re spending money, and therefore reduce your risk of getting into dangerous situations with debt.
With your budget in hand, you’ll have a much easier time of
saving for crucial things like new cars or a deposit on a house. What’s more,
you’ll be able to sleep soundly, knowing that a sudden bill isn’t going to
throw your entire life out of balance. Budgets give you the freedom to live a
life where you’re confident in your ability to manage money.
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