We all dread it, but it’s the core aspect of every successful financial life – an effective budget plan. Without it, it’s like travelling without a map – there’s no direction. That is why no matter how cumbersome this task seems to be, it cannot be skipped.
Fortunately, there are much simpler ways to make budgeting painless. We’re trying not to make it any more complicated than it already is, because here we outline only three easy steps.
- Be Realistic About Your Income and Expenses
Begin by listing down everything you earned and everything you spent during the last 3 months. While this might seem to be a bit of a work, you’ll need to take into consideration expenses that do not occur on a monthly basis. Be honest and do not leave anything out.
- Choose a Customised Budget Plan
There are many types of budget plans out there, so it is important to check a few ones for quite some time in order to see which one works best for you.
The 50/30/20 rule. This rule suggests breaking your expenses into three categories, so that 50% of your income would go to your essential expenses (food, rent, utilities), 30% would go to nonessential expenses (cable, movies), and 20% would go to your savings.
Fixed and variable expense. This one divides your expenses into two types – fixed and variable.
Bare bones budget. This type of budget is based on the lowest possible income and is most applicable to individuals with changing income. In this type of budget, you will focus only on absolute necessities.
- Take Advantage of Technology
The last part of budgeting is tracking where your money goes. For some, putting their money in several envelopes does the trick. But in this day and age, when everything can be done with a click, taking advantage of available tools will not only help simplify things, but actually make budgeting quite enjoyable. You can choose between several desktop and mobile apps.