How to Budget Like a Pro2016-06-22
Many people live their lives from paycheck to paycheck and spend their money without any conscious awareness until it runs out. Operating like this can lead to financial stress, wasteful spending and a lack of savings for the future.
Learning how to budget like a pro is an essential life skill which will make your life less stressful and ultimately more enjoyable. You don’t need to be highly financially skilled in order to manage a basic budget. Over time and as you get the hang of it, budgeting will become more natural and intrinsic. These are three helpful ways to start off your journey to budgeting like a pro.
List the categories you will need to include in your budget such as groceries, rent, gym contract. Make sure to include a category for miscellaneous as some months you will need to spend money on things which do not fall into one of the main categories. Once you have done this, list the categories in a hierarchy in terms of importance of spending; groceries will likely be a more important expense than a new shirt.
Monitor Spending Habits
Analyse your spending habits over the past few months by going through your bank statements; this exercise will help you to become a more conscious spender. Use different colours to highlight and separate each item into the categories in order to become more aware of where you spend most of your money. Once you have done this, separate each of the items into a needs and wants column; you will be able to assess any areas where you are spending too much and identify any expenses you can cut out in the future.
Set Savings Goals
The main purpose of a budget is to monitor your spending to ensure that you are not wasting any money you could be saving. Part of developing a budget is deciding on a realistic amount to save each month. Savings are useful when you need a larger sum of money at a point in time to spend on something specific. It is important to set yourself realistic savings goals which are in line with your life goals and dreams. If one of your life dreams is to holiday in Bali, set out a realistic savings plan which will allow you to pursue this dream in the future; this way you will have a realistic understanding of how much and how long you will need to save for.
A budget is an assessment of your income and all expenses for a set period of time. It is designed as a helpful tool for monitoring your financial situation to ensure that you can live the best life smartly. It is essential to manage your budget across all aspects of your life, starting with your grocery shop.