One of the most important things that you can do for yourself is create a budget and stick to it so that you can understand where you may be going wrong when it comes to savings. Making a budget can seem very overwhelming, but you can do it. All it takes is for you to break down a process bit by bit, because nobody can get through to their savings goals without knowing their incomings and their outgoings.
You can start with figuring out what your incoming earnings will be post-tax with the Take Home Pay Calculator, and from there, start breaking down your bills that you have to pay. Once you’ve broken down the list of bills that you have to pay, IE your expenses, you can then learn to track your expenses and your transactions to find out what your budget is covering and what it’s not. No matter how you feel about budgeting, here are the steps that you can take to create one to make you feel more in control of your finances.
- List your income first and foremost. It doesn’t have to be just from your main job. Maybe you sell cakes, or you sell art on the side. Whatever your incoming may be, whether from the government, from your job, or from any site hustles, you need to list it all down Any single time in a month you gain extra cash. That is your income.
- List your expenses next. Now that you’ve planned for the money that’s coming into your bank account, you can start planning for the money going out. When you’re making a budget, before you put in all the things you’ll pay for this month, make sure that you set at least 10% aside of that budget for savings. So whatever you have after tax in your account, put 10% of that into a savings account, and then start deducting. This way you are always going to be budgeting for your savings goals as a tax rather than as a bill.
- Start subtracting. It’s not going to be too bad, but it’s always going to make you wince to see how much money you don’t have leftover after you’ve subtracted everything. Subtracting all your expenses from your income means that you should end up with a surplus if you are budgeting correctly.If you have something leftover, great. If you don’t, then this is where you need to start combing through all of your transactions month by month to see where you could be saving money. Do you really need a $5.00 coffee everyday? Probably not. You could save for a month and buy a coffee machine and save yourself the cash.
- Track everything. One of the biggest budgeting secrets that you could ever look into is tracking. Track your transactions. Every single one, no matter how small or how big. If you’ve paid for parking, if you’ve paid for groceries, if you’ve bought an apple at the grocery store, you need to track it. Every single outgoing needs to go into a spreadsheet so that you can see where you may or may not be frivolously spending. If your bank account shows you getting a healthy income through the year, but you feel like you’re on the breadline, then there is something going wrong.