Budget Your Money For Security And Long Term Goals
Money and debt reduction can be an issue for every one of us. Spending more than you earn can be fun at first, but after a while, it becomes a burden because of debt increase. If you want to know how to budget your money, read the tips below.
On the one hand, it is hard to get out of debt, especially if you are used to spending a lot. On the other hand, there is also a good news: you have the power to change your lifestyle and create the wealth you need and desire.
The first step to getting out of debt and start saving money is to plan a monthly budget. If you feel frustration and anger because of your lack of money management skills, do not worry. Nobody is born with it. You must simply have to learn those skills, like everything else in life. You must also be perseverant in trying to change your behavior.
Determine what your objectives are. Before learning how to budget your money, make a list of goals you want to reach. For example, you may want to get rid of that credit card debt, and save money. However, you must be careful with this step of the budgeting process. Your objectives must be very clear and specific. Create goals like “I want to save 10% of all my monthly income”, instead of “I want to save some money”.
You can easily see why the first example will work better than the second one. When you don’t set specific measurable goals, your brain will not get into the proper mindset, in order for you to be able to accomplish a certain objective. Keep this in mind: your objectives must be S.M.A.R.T. (specific, measurable, attainable, relevant, and time-bound). When you make your goals list, do not forget to be realistic.
Don’t be hard on yourself. Set only three or four main goals, at first. Then split those goals into smaller ones. This way, it will be easier for you to achieve them while keeping your motivation up.
Identify Your Income and Your Expenses
Put down all your monthly income, as well as your spending. This way you will keep a close view of your transactions and cash-flow. Keep all your household bills to gather as much information as you can. Then think about all the other expenses such as living costs, insurances, transportation, recreational spending (hotels, restaurants, hobbies, sports, etc.), and even family and friends spending (presents).
On the other hand, you must also consider your income such as salary and residual income (if there is any). Residual income can come from owning part of a company, stock exchange transactions, etc. Save all this information. This way, you will be able to see how things are changing (hopefully, improving) from a month to another.
Cut Unnecessary Costs
Learn to separate your needs from your wants. Things like food, rent, mortgage, study loans, utilities, etc., are necessary things. You need these things to survive and to make yourself a nice life.
However, there are also other things such as impulsive shopping sessions, eating out every day, engaging in specific activities you are not even interested in, but you do it anyway because you need the group recognition. All these things lead to massive useless spending. You must learn to control your impulse. For example, when you do your groceries, make sure you take a list with you and stick to that list.
Create Your Budget Plan and Set Priorities
First thing every month should be paying your monthly debts. After that, you should pay your rent and household bills. The third step should be saving some money, even a small percentage of your income. This can make a great difference in your lifestyle. Also, you might even become more relaxed and less frustrated because you know your debt value has decreased.
Make Extra Money
Find or create ways to earn some extra cash. Here are some recommendations for you:
- Sell the things you don’t use anymore – the easiest way to do this is online, on websites such as Amazon.
- Start your own business – if you have a hobby or a thing you are really good at; you could start making money out of it. For example, you could tutor students, or be a business or life consultant.
- Ask your boss for a raise – however, first make sure you deserve it.
- Change your job for a better-paid one – if the previous point has not worked out.
- Crate a blog – if you like writing, start a blog. When you have enough followers, you can start making money with that blog (for example, affiliate marketing).
All in all, if you question has always been how to budget your money and save, I hope the steps above gave you some answers on how to successfully create a wealthy lifestyle.