Welcome back to another beginner’s guide! This week we’re talking all about budgeting and finances-a topic that can be overwhelming and complicated to deal with. I’ve laid out a few steps below that can help anyone set up an easy, maintainable budget!
☆ Step 1: Write out all of your expenses for a monthly basis
I like to look at my budget on a monthly basis, that way I don’t get too overwhelmed. I like to break my expenses down into essentials, subscriptions, and personal expenses. Essentials I consider to be non negotiables that I have to spend every month. This can vary for everyone, but for me it includes rent, utilities, cable & wifi, groceries, and gas.
Next, I make a list of all the subscriptions that I have to pay every month. This could include things like Hulu, Netflix, Spotify or even a gym membership. These are not necessarily essentials, but are still reoccurring expenses every month that you are responsible for.
Lastly, there’s the personal expenses category, and this can include any extraneous expenses you may have. For me it mostly consists of my dining out budget, and whatever else I may want to buy that month that would not be considered a necessity.
Once you figure out these three categories, it gives you a better idea of how much your spending every month.
☆Step 2: Figure out a rough estimate of your monthly income
For some people like myself, you pretty much have a fixed income every month that doesn’t change. This makes it easy to calculate a budget because you always know how much is coming in. If you’re self employed, or get paid hourly, you may not have a set amount you make every month, but try to come up with a rough estimate, even if you keep it on the lower end.
☆Step 3: Decide what amount you want to save every month
The general rule of advice is to save about 20%-30% of your income. Depending on how much you can afford to save, I’d obviously recommend saving as much as you can, especially if you’re saving up for a big purchase. (More to come on How to Save post coming soon)
☆ Come to a reasonable limit on your spending
Now that you have a clearer picture of what your financial situation is, you can set a reasonable budget that you think you can maintain. Budgets are meant to be changed and you should feel like you have to keep it the same for every month-some months your expenses may fluctuate, and your income may as well. Try to keep an open mind with it, and know that you can always adjust! However, don’t use that as a reason to continuously over spend-there’s a reason you have a budget after all.
I hope these tips can help any of you who may be struggling to set a budget or find a maintainable one!