If you’re determined to create a budget which will allow you to purchase necessities and luxuries as well as save money, simply continue reading to discover 7 budgeting tips, which will set yourself up for success.
7 Foolproof budgeting tips which will transform your finances:
Follow a simple 50/20/30 budget
Budgeting doesn’t have to be complicated. As an example, you may want to use the 50/20/30 plan which was popularized by US Senator Elizabeth Warren which allocates 50% of your disposable income to essential items such as electricity and groceries, 20% of your income to your long-term savings account and 30% of your income to luxuries such as new clothes, movie tickets and family vacations.
Set up multiple bank accounts
Ensure that you have at least two bank accounts. One bank account to deposit your long-term savings, which offers a higher interest rate as well an everyday account, which you can use to store money which you’ll use to purchase everyday essentials and luxuries.
Track your expenses
If you prefer to use cards to pay for goods and services, make sure to print off your online statements so that you can keep a record of all of your expenses. Alternatively, if you prefer dealing with cash, make sure to keep all of your receipts, so that you can use a free smartphone app to tally up all of your expenses.
Save for big purchases, instead of taking out a loan or purchasing an item on finance
Don’t be tempted to purchase an expensive item such as a car or a flat screen television on finance as you’ll end up paying for more for your item, than if you paid with cash. As if you take out a loan or purchase an item on finance, you’ll have to pay a fixed rate of interest. In some cases, you may end up having to pay a premium of several hundred dollars. So it’s well worth saving to purchase your big purchases with cash.
Prioritize your needs over your wants
As an example, if you can only afford to pay for car repairs or to spend a night out with your friends, it’s important to prioritize paying for your car to get repaired over a night out.
Make sure that your budget is realistic
As an example, make sure that you allocate enough money to purchase your weekly groceries. As if you draft up a budget that is unrealistic, you’re simply setting yourself up to fail. Also make sure, to budget a few luxuries into your budget as there’s no point saving thousands of dollars if you forget to have fun and treat yourself to occasional luxuries such as a massage or a cup of freshly brewed coffee from your favourite cafe.
Be prepared to adjust your budget if necessary
A budget should never be set in stone, after a few weeks of testing out your budget, you may want to make a few tweaks to your budget based on the new information you’ve gained.
So if you’re determined to make the most out of your disposable income, it’s well worth trying out the 7 budgeting tips listed above.