Tips For First-time Budgeting

basic budgeting

1. Base your budget off of your income.

Along with the overall structure of your budget, you should also think about the type of budget that is best for you. The experts recommends basing your budget on your earnings. So if you get paid weekly, create a weekly budget or a monthly budget if you get paid monthly.
Feel free to try different formats and ways to manage your budget until you find the one that best suits your lifestyle and money goals.
Also note how often you spend money. If you’re pulling out your credit card every day, you may want to set a weekly budget. A weekly budget can help you keep an eye on your day-to-day expenses.

2. Differentiate between short-term savings goals and long-term saving goals

Once you’ve asked yourself why you want to start saving, the next step in setting up a budget is to break down your savings goals into short-term and long-term plans.
What is the purpose of short term savings? These relatively simple goals could include the following:

  • Great furniture
  • Weekend getaway
  • Down payment for the car
  • Emergency Fund
  • A deposit for a house
  • Paying off any long-standing debt
  • Starting up business
  • A journey around the world
  • Saving for retirement

3. Separate fixed expenses from variable expenses

Once you’ve got a good idea of where all your money is coming and going each month, the next step is to separate your expenses into fixed and variable costs.

  • Monthly rent
  • Heating and electricity bills
  • Insurance costs such: car, personal liability or property.
  • Student loan repayments
  • Grocery shopping
  • Entertainment such as: nights out, cinema trips, concerts
  • Clothes puchasing
  • Dining out

4. Keep it simple.

When you’re creating your budget for the first time, try to keep it as simple as possible. This way, it’s not overwhelming and it will be easier for you to maintain.

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