How to Easily Create a Budget
Here is a super easy way to manage and allocate your funds
If just the word budget evokes thoughts on no-frills, ramen noodle dinners and nights at home – don’t worry I have found an easy way to help you to build your bank account without losing your cool. My goal here is to adjust your view when it comes to budgeting, err…. money planning and set you up with a system that allows you to see how, where and when you spend your hard-earned cash.
Truth be told. I don’t have a budget. I track my spending on a monthly basis and save consistently and spend purposefully. There are no fast and hard rules for where you should put your money, but there is a general principal/benchmark to consider. It’s the 20/50/20/10 guideline.
Here is how this guideline works
20% This is where you pay yourself first – this is your SAVINGS
50 % No more than 50% of your pay should go towards your ESSENTIAL expenses i.e., housing, transportation, utilities, and groceries
20% DEBT repayment
10% FUN – this is spending money for gym fees, hobbies, personal care, restaurants, and other miscellaneous expenses.
Try it for yourself.
Use the following calculator to devote 20% to YOU, 50% to your essentials, 20% to Debt and 10% for FUN!.
Paying yourself first
I remember author David Bach, the author of the Automatic Millionaire, said that we need to pay ourselves first. I really took this adage to heart and try hard on a monthly basis to save in a separate saving account first and then move on to paying bills/essential
What are essentials?
These are the things you need, this can include:
- Child care
Use 20% of your of your after-tax income to pay down your debt. I know that it is hard, trust me, I know but the sooner this debt can be kicked to the curb the more funds you can use to save, upgrade you home, build a emergency fund, etc…
In every budget there needs to be a funds to spend on what you would like. We need to have a balance between savings/paying down debt and having fun.\
So that’s my idea, what do you think? Share you ideas/comments below.