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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