Updated: Dec 6, 2019
In its simplest form, budgeting is similar to elementary math. If I bring in $2500 of income, how can I pay for food, rent, healthcare, and fun without spending all my money? The answer is by setting up a budget. Although simple in theory, budgeting can be complex when you factor in willpower and financial knowledge. Below are some tips to help you budget like a pro:
1. Set a Budget… Period!
A budget is the starting point for almost every goal in life. From buying a house, to that new pair of shoes you have been eyeing for months, a budget can help achieve all of that and more! Here is a great budget template from NerdWallet to help you get started here
2. Consider an All-Cash Diet
Credit cards, financing, and predatory lending are just some of the ways spending money comes so easy to us these days. If you find yourself consistently overspending money you do not necessarily have, an all-cash diet can help break you out of that cycle.
3. Take a Daily Money Minute
This one comes straight from Western Reserve Consulting Founder and President Rachel Faciana, who swears by setting aside one minute each day to check on her financial transactions. This 60-second act helps identify problems immediately, keep track of goal progress—and sets your spending tone for the rest of the day!
4. Allocate at least 20% of your Income to Financial Priorities
By priorities, we mean building up emergency savings, paying off debt, and padding your retirement nest egg. Seem like a big percentage? Starting somewhere is better than nothing. Open up a savings account with a good interest rate in order to make the most of your dollar.
5. Budget 30% of Income for Lifestyle Spending
This includes movies, restaurants, and happy hours—basically, anything that doesn’t cover basic necessities. Although this may seem easy enough, we often overspend in this category. Sitting down and taking in a full picture of your income and expenses will help you get a better sense of where you stand.
Have questions? Need more guidance on this financial topic and more? Contact Western Reserve Consulting today for a free introductory consultation and let us find solutions that work for you