Step-by-Step Guide to Give Your Budget a Boost
September 25, 2020
It’s not easy working within a tight budget, as it can be very restrictive and force us to live life in a certain way. That’s why many people within a tight budget end up in debt, to help fund a normal lifestyle. Debt is a bad thing to get into as it can hang over your life for a long time, so that’s why people need to put in the effort to give their budget a boost. Here are a few easy to follow steps to help improve your budget and give you better control over your finances.
1. Identify Your Goals
There are many different reasons people budget. It can to help them get through a tough financial year, help them save for a holiday, or can be as simple as to help them put a little bit of money aside for Christmas. Whatever your goal is, identifying it and knowing what you’re saving for can help you stay focused and be more determined. If you’re creating a specific monetary goal, make sure it’s achievable so that you don’t feel bad if you don’t manage to hit it. A good goal is to save 15% of your monthly income, after a year this can add up to a sizable saving.
2. Figure Out Your Expendable Income
An individual’s expendable income is the amount of money they have left after taking away essential payments such as rent, taxes and bills. You need to make sure that you can afford your essential bills, otherwise you’ll struggle to live within your means. To boost your expendable income, you can always partake in a side hustle such as create an online store or earn money with branded surveys.
Once you have an expendable income, use this to create a daily spending budget that can be used for socializing, to buy food and other things like that.
3. Track Your Spending
Now that you have a budget to stick to, it’s important to track and monitor your spending to help you stay within your means. Keeping a spending diary, where you jot down every purchase and how much it costs, can help you identify where you’re spending most of your money and can help you identify spending habits that you can eliminate which will enable you to save even more. Tracking your spending keeps you accountable and can encourage you to be sensible and save your money effectively. If you do this well, you can also roll over the money you’ve saved one day and add it onto your budget for the following day if you need it, which can make things more comfortable.
4. Pay-Off Debts
As your budget grows and you get a nice amount of savings, a good thing that you can do is to put it towards some of your debts, as this can help to pay them off faster. For example, if you’re paying-off a mortgage, paying-off a big chunk will allow you to reduce your monthly repayments slightly which can help you improve your budget in the future.