Learning how to manage your expenses while saving for your goals can help set up a solid future.
Are you among the many who included budget planning in your list of 2018 New Year's resolutions? If so, congratulations. If not, there's still time.
Budgeting your money is more than just watching what you spend; it's also about paying yourself first. This means getting the most out of your money by balancing your current expenses and future goals, while still allowing you to enjoy your life. Retirement, for example, may seem to be a long way off, but budgeting today can help you stay on the path toward your eventual retirement.
Here are a few budgeting tips and ideas as you start the new year.
Budgeting your money can help you to plan ahead and get yourself on firm financial footing. Think about all the things you spend your money on in a month. You probably have a general idea of your expenses, but have you ever been left asking, “Where did all my money go?” The 50/20/30 rule is one effective way to gain more financial control over your expenses.
The 50/20/30 rule can help you determine how much to spend and how much to save each month. Suppose your take-home pay (after taxes and 401(k) contributions) is $50,000 annually. That’s $4,166 per month.
There are several steps you’ll need to take in order to come up with a budget that works for you and your lifestyle. You’ll need to track your income versus spending, see where your money is going now, and then determine what changes you might make based on the 50/20/30 rule.
There are a few different ways to track your spending, such as recording your purchases in a notebook or using an app on your smartphone. Check the sidebar for a few budget planner programs that can help you track your spending.
Mint // A popular budgeting app, Mint combines an all-in-one approach to track your finances, help you make budgets, check your credit, and send alerts right to your phone.
Quicken // Personal finance software with a variety of features that allow you to personalize your approach. Whether it’s a general household budget or managing more detailed spending habits, Quicken has something for everyone.
EveryDollar // This app allows you to create budgets, manage money, track your spending, and split transactions with overviews of your planning, spending, and remaining funds.
It’s easy to talk about budgeting your money, but it takes discipline to follow through on your plans and find the funds to support your spending and saving goals. Here are some initial things you can do to stay on track toward retirement and other goals:
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