Creating a budget is an important part of saving money. But it can be challenging to create a budget that allows you to have fun while still saving on cash. Here’s how you can create a customized budget plan that suits your needs, so you can stick to it!
Calculate Your Net Income
In order to create a workable budget, it’s important to first know how much you’re working with. You’ll know this by calculating your net income, either by yourself or with the help of an app. Once you know exactly how much you make, you can plan for it much more effectively. To find out your net income, you should take your total wages and subtract taxes and deductions for employer-provided programs like health insurance and retirement plans.
If you don’t do this, you may end up overspending because you’ll be budgeting for an amount that’s not actually all yours to spend. This is important for everyone to do, including freelancers. If you’re a part of the gig economy, you need to keep detailed notes of the contracts that you get. Doing this will make it easier for you to manage the irregular income that most, if not all, self-employed people and gig workers are familiar with.
Track Your Spending
Next, you need to track your spending in order to find out exactly where your money is going, and how much of it’s getting spent. This will enable you to know where you spend the most money and so make it easier for you to figure out where to save. To do this effectively, list your fixed expenses, which include monthly bills. Rent, mortgage, car payments, and utilities all go here. The other expenses that you need to list are variable ones like gas, groceries, and entertainment.
It’s in these variable expenses that you may easily find places to cut back on. For an easier time, use your bank and credit card statements as these will categorize your monthly expenses. This step should be done in an easy way that involves using whatever is the handiest for you. This could be an application on your smartphone, a pen, and a notebook, or templates and spreadsheets that you can find online.
Create a Spreadsheet
Last but not least, create a spreadsheet as it will make it easier for you to see the totals of your income and expenses. Ideally, your income should be higher than your expenses when you tabulate them. When you have a higher income than expenses, you have a budget surplus. This means that you can go for a more expensive car payment or increase the amount you’re paying toward your debt, among other things.
If your expenses are higher than your income, you have a budget deficit. This means that you need to go over your spreadsheet and find out how you can save money. Maybe you could buy your groceries in bulk in order to save on this monthly expense. Or you could cook more meals so that you spend less on eating out. Other options you have include moving to a cheaper apartment, downgrading your car payments, and even getting a second job. All of these are options that will help you to balance your income and expenses. If you want a good spreadsheet template, there are quite a few online. With around 1.8 billion websites operating at the same time every single day, you’re sure to find one with a spreadsheet that you can use.
Use these tips to create a budget that you’ll be motivated to stick to and it will be the best thing you did for your finances. The infrastructure of your savings may take some time to build, but you’ll see the benefits of making the effort as time goes by.