Knowing how to budget can also help you make good decisions on where to spend your money, how to save, or even pay off an existing debt. Here are some basic principles when it comes to budgeting like a pro!
Get to Know Your Financial Priorities
Before you can develop a budget, you have to first know your spending priorities. The most common priorities are your monthly utility bills, food expenses and school expenses, to name a few. Savings and entertainment expenses should also be considered in one’s budget.
Develop a Budget
The first step to budgeting is to define the amount you wish to spend after determining your spending priorities. For instance, if you’re getting P30,000, you might want to allot P25,000 for expenses and the remaining amount for your savings. If you don’t know what amount you should start with, consider how much you spent in the past few months and lower the amount if you think you’re spending too much.
Monitor Your Expenses
Once you’re able to set an amount, the next best step is to track where your money is going. The key thing here is to take note of every purchase or payment you’re making, no matter how big or small, so that you’ll have an accurate view of where your money typically goes every month. Sometimes, we think that small expenses are trivial, but done repeatedly, these little expenses add up and might be taking a big dent on your monthly budget.
In order to make your monthly budget work, moderation is key. Having too tight of a budget can take away the fun from you and your family’s life while having a generous budget can leave you with no savings at all. Strive to strike a balance between the two and your budgeting efforts are more likely to succeed.
Make Your Savings Automatic
Another effective way to make sure you’re able to save monthly is to make your savings automatic. Once you get your monthly allotment, you can arrange to have it automatically debited from your account to your savings account. This way, you’re obliged to only spend the remaining amount and you won’t have to go overboard on your budget.
Pay With Cash
Last but not the least, try paying using cash so it’d be easier for you not to incur any additional credit card debt and stay within your monthly budget.