If there’s one thing for sure, it’s that creating a budgeting plan can keep the financial area of your life on track. Whether you’re spending too much on activities and food or you’d just like to know where your income is going each month, a budgeting plan can change your outlook on your spending habits. However, it’s not something you need to overthink – an ideal budgeting plan can be simple and yet very effective. Otherwise, you might run the risk of becoming overwhelmed and losing track of your finances. Here’s a few tips that will help you create a simple and easy budgeting plan.
1. Be Realistic. When it comes to creating a simple yet effective budget it’s all about being realistic. There’s no point in creating a budgeting plan that you can’t stick to, and soon you’ll find yourself struggling and unmotivated. Be realistic about why you are creating the budgeting plan and what you want to achieve – are you saving for a holiday or are you hoping to cut down on your overall monthly spending? Whatever the reason, you need to make sure it’s achievable or else you run the risk of giving up entirely.
2. Determine Your Income After Taxes. This sounds like a no brainer, but many people actually don’t know how much spending money they have at their disposal each month. They may know how much they earn annually and some will have a rough idea of how much they’re paid every month, but do you know your income after tax? By calculating your monthly income after tax, you will know exactly how much money you have each month to work with in your budget.
3. Include All of Your Expenses. Your budgeting plan won’t be simple or effective if you don’t take into consideration all of your expenses – and we mean ALL of them! Many people make the mistake of only budgeting for the key expenses such as rent, food, and bills. However, you’re sure to spend money on seeing friends, treating yourself to a new outfit, and PNC bank fees. By including all of your expenses, you’ll have a better idea of how best your income can be best utilized.
4. Set Regular Goals. All budgeting plans should have established goals as these will help to keep you motivated and on track. A goal could be to save a certain amount of money by a specific date or to cut down on your spending by 10%. Make sure the goals are personal to you and achievable.
5. Record All Spending and Track Progress. As you go through your budgeting plan, keep track of your spending and progress. This will highlight the areas you could improve in, such as spending less on food or cutting down on phone usage. Plus, you’ll see all the improvements you’ve made over time which will be a great boost.
As you can see, it’s very easy to create a simple yet effective budgeting plan. With a little bit of planning and a good idea of your spending habits, a budget plan can help you to save money.