Budgeting is the foundation of financial planning. Many people are in a financial mess because of the simple fact they are spending more than they make. Here are a few tips that will help you regain control of your budget and allow you to start dominating it.
Tip 1: Use the 50/20/30 rule
- 50% of your budget is for your essentials needed to live. This includes housing, utilities, groceries, transportation, and insurances.
- 20% of your budget is for savings and debt payback. Pay off debt as fast as possible using the snowball method, and then start saving! This includes saving for emergencies and retirement.
- 30% of your budget is for YOU! Everything else in your budget lives here… if it’s important to you, make sure you leave room for it!
If you are having a hard time implementing this, it might be time to jump into the envelope system. Try using something like Every Dollar (Dave Ramsey’s favorite budgeting tool). I personally think it’s one of the best budgeting systems out there!
Tip 2: Cut back on useless spending
- It is easy to find a couple hundred dollars in the budget. Some of the first things that can go will save you a lot of money! Cut back first on things like cable, excess data plan for your cell phone, travel, and eating out.
- Shop your insurance – If you have been with the same insurance company for years, you can probably find a better rate.
- Automate bills so that you are not paying late fees!
- Be open about your poor spending habits and don’t be afraid to have an accountability partner. We are better together! If you feel like you could use a second pair of eyes on your budget, or would prefer to work with a professional with this, check out working with a financial coach.
- Being frugal is okay! Most people that live this type of lifestyle have created healthy saving habits
Tip 3: Budget often
- Your expenses tend to change every month. This means your budget needs to change, too.
- Use technology so that you can have a real-time view of your spending during the month.
Taking the time to make these changes will make a huge difference in your financial future. Take control now and start building wealth for the future.
Our Dave Ramsey-Certified Financial Coach can help you find ways to save money and build wealth.
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Jeremy Sharp is the Director of Financial Planning at Stewardship Financial. Jeremy loves helping people figure out ways to organize their financial life and make better decisions with their money. Jeremy and his wife have two boys and is an avid fan of New England sports.