Tell someone they need to budget and it’s a negative. My spending is limited, I need to monitor every penny I spend, it’s stressful. It just isn’t fun.
Many financial gurus and especially all those expert bloggers say a budget is essential. You can’t know how much to save without a budget.
I say balderdash! Needs, wants, savings? Here’s is the real deal.
You save automatically, at least 15% of gross income. That means the saving occurs before you get your hands on the money. The place to start is any plan where you get an employer match if available. Otherwise set up auto transfers or direct deposit.
Once you set up auto saving you spend the balance any way you want. Oh yes, it also means there are no credit card balances carried from one month to the next, ever, because if there are, are you are living above your means.
No need for this:
Start by making a list of all of the money that you have coming in and all of your expenses. To help you assess your current expenses and spending habits, look through past bank and credit card statements to see where your money has been going. This will help you to see the areas where you may be able to cut back.
Choose the right budgeting method Once you know your current position and your spending habits, create a physical or digital copy of a budget for your next paycheck. You can make this easier by choosing the best budgeting method that you can stick with. For instance, some find the 50/30/20 budgeting method helps them save more money.
This method has you allocate your income into percentages across your expenses, spending money, and savings. So, 50% goes to your needs such as housing, food, etc., 30% goes to your wants, and 20% goes towards your savings!