Everyone is always excited on paycheck. It is more of a reward for the period that you have put up hard work. Unfortunately, some people do not plan for the period ahead thus going through misery waiting for the next paycheck.
The right budget will ensure that you live within your means. It helps to spend money on things you love and still not be worried of running out of money. A budget plan is vital in managing your finance. It entails income, expense and savings.
Take a look at some of the budget plans you can employ;
Traditional budget: Have a list of your income, add your expense, and then find the difference. The remaining will be set aside for saving.
A reverse budget: Involves setting a goal which will guide you on the amount to be set aside for saving then spending the rest.
The 50/30/20 budget: Income is divided into three sections i.e. needs, wants and savings. 50% goes to the needs, 30% to the wants and 20% to saving. This is a nice method yes but it will restrict you to the amount you can save and at times it becomes difficult to differentiate between a need and a want.
Intentional budget: Combining two budget plans i.e. reverse budget and traditional budget. This method helps realize how and where money has been used and where to optimize overspending.
The following are what you should take into consideration when outlining your budget plan;
- Calculate your income; this includes all sources of income.
- Save first. We all have our long and short term goals. Basing on your goals, decide on the amount that you will put aside each month to help you achieve your financial goal.
- Set monthly automatic withdrawals. Do not skip this step. After deciding on the amount to be saved each month, transfer the amount to a savings account and set an automatic monthly withdrawal of the same.
- Know where the remaining money goes. List your expenses down and indicate the percentage of money to be used under each. Expenses are things such as; Home (rent), food, health, transportation, family, entertainment, personal care and emergency care. This is just a sample but you can list as many expenses as you can if you have them.
- Rinse and repeat. After having all this done, calculate the amount remaining and add it to your savings and change your saving settings.
Budget planning is never an ending process. It must be done every month. Try to get the category where you overspend and optimize it by adding the amount to your saving account.
Saving is not all rosy; it requires discipline and all it pertains. Just keep doing it; soon you will be the master of your finances.