What is budgeting? Budgeting is a plan that you create based on your income. It will allow you to have more financial freedom and will create less stress. It will provide you with consistency, and a simpler way to manage your money.
There are budget templates/plans you can follow or you can create one of your own. Whatever works for you and at the end allows you to reach your ultimate goal. The key to keeping a budget is to track your spending! You want to have an accurate picture on where you money is going and where you want it to go. Calculate your regular paycheck, (whether it’s weekly, biweekly or monthly) first, see what you have automatically coming out. 401(k), health and life insurance etc. Then you want to subtract any bills, payments, expenses etc. that will be coming out of your check. Once everything is subtracted, you can begin to see what you have leftover. Once you have an idea of what your income will be and what you have to spend and/or set aside for your needs, you can determine what amount to save works for you. See where you can make changes in your spending to accommodate what you want to save. If your check varies, your budget plan might vary as well. If you have a set income you can set up your budget plan however you like, (weekly, monthly etc.).
When picking a budget plan you want to make sure it covers all your needs, some of your wants and most importantly your savings. Try using the 50/30/20 rule. Allow up to 50% of your income for needs. Leave 30% of your income for wants. Commit 20% of your income to savings. Your needs should include: groceries, housing, basic utilities, transportation, insurance, minimum loan payment, child care and other expenses that you need so you can work. If any of your needs go over the 50% mark, you may have to dip into your “wants” portion of your budget. If your needs go under, that leaves you with more money to work with elsewhere. Wants can include things such as eating out, gifts, travel and entertainment. Figuring out your wants can be difficult. For example, is a gym membership a want or a need? That’s for you to decide. If you’re eager to get out of debt as quick as possible, you will see that some of your wants can wait. Now, don't put all your wants to the side. Your budget shouldn’t be so tight where you can never buy anything you want or buy something just for fun. Lastly, is the 20% of your income that you’ll save. This includes putting something away for the “unexpected”. You want to save for the future, pay off debt, have an emergency fund etc.
This is one of many templates that you can use to help budget your money. For more information or ideas on templates visit https://templates.office.com/en-us/budgets