3 Essential Components for Budgeting
So you have a budget? Over the years of budgeting I have uncovered several pro tips to help you in each of the 3 Essential Components for Budgeting. 70% of Americans live paycheck to paycheck, a budget is imperative to reverse those numbers. I have been posting a lot about following your dream lately. Taking control of your budget is the first part to following your passion.
3 Essential Components for Budgeting:
There are several ways to make money. The average millionaire has 6 streams of income. I am sure we all know going to our day job to get a pay check is one way. But, there are many other ways to generate income. One that I have tried out over the past year is investing in the stock market to create some additional money. I recently used some of the extra money I had made from the stock market to remodel my bathroom. You could also look at starting a side hustle like creating a course on Udemy, Starting a Blog, or Tutoring. The key here is to make money and if you can have fun by doing it, go for it!
I recently wrote a blog post on savings, I would recommend reading it. Saving money is a crucial part to living a sound financial life. Whether you save for an emergency fund or for a new car, there are several tricks to saving money I have found over the years. First, automate your savings. Try to have your budget so dialed in that you know exactly how much you are saving each month. This streamlines the process. As a new season approaches try to find fun things you like to do that are free or inexpensive. For example instead of going out to eat with you friends, go for a hike and have a picnic. I have recently fallen in love with hiking. It is free and I get to enjoy the outdoors with my main man Tuney! I would also recommend reading the 3 Minimalist Habits Everyone Should Try to get some other ideas.
One important part to saving is setting a savings goal. We always hear that we need to save money, but if you want to save for a new car figure out in what time you want the vehicle and then figure out how much you need to save each month to get there. All savings are good, but I have found that having a purpose makes it exciting to save and keeps you focused on the plan.
The part everyone loves to do, but hates to think about after the fact. Why is that? Spending money gives us a temporary high because we are getting new things or experiences/adventures. It is definitely by no means wrong. I do believe we should have control over our spending though. When you have money allocated to each category you can spend without guilt. In your budget there are two types of spending:
These are your reoccurring monthly expenses. Car insurance, rent, gym, cell phone, etc. Pro tip – A lot of car insurance companies are less expensive if you pay every 6 months or yearly. I still breakdown that expense into monthly payments and keep the money set aside for that one large payment. If you pay for the gym membership, but you only go for the free pizza on Wednesday nights, you can probably cut that expense out. LOL
Taking control of you weekly expenses is how you become a pro-budgeter! The most important part of the budget, in my opinion, is the weekly expenses. This is the go out to eat fund, the taco Tuesday fund, the I need this new shirt “emergency” fund. You get the picture, your weekly expenses are imperative to you having control over your financial life. I do a weekly budget because it is easier for me to know I am in control opposed to a bi-weekly budget. You should put your normal weekly expenses in here (eating out, shopping, pet stuff, miscellaneous) Pro Tip- Write down your monthly budget on a note pad weekly and as you spend minus things off. I do it old fashioned because it keeps it simple and top of mind.
If you have not created a budget yet, I highly recommend using my budget template...it's free, what is the worst that could happen?
Do you have a Pro Tip you do that I did not mention?
What has helped you the most in budgeting?