Planning A Budget-6 Easy Steps to Achieve Your Financial Goals

“If you live like no one else, later you can live like no one else.” This is the advice that inspires us to save and invest consistently. The guidance reminds us that all of our hard work will pay off in the end if we keep on working towards our financial goals. After all, there’s nothing more gratifying than waking up some mornings knowing your net worth has surpassed what it once was.

How Do you Create a Simple Budget Plan?

What you do with your money is almost as important as how much you make. You could probably answer this question well enough, mostly if I asked, “Are you living paycheck to paycheck?” or, “Do you have an emergency fund?” If you answered yes to both questions, then we’ll keep talking. But if not, then there’s plenty of work to be done on that front.

Clarify your Goals

First, you need to define precisely what your budget plan is. Do you want to retire at 65? Do you want a certain amount of money set aside for emergencies each month? If so, it’s time to sit down with a pen and paper and write precisely what those objectives are. Imagine how great it will feel when they’re all within reach!

Calculate How Much Money you’ll Need

A great way to get that money is setting up an emergency fund. You can do that by creating a savings account for your emergency fund and then depositing at least 10% of your paycheck into that account each week.

Or, you could start small and increase the amount of money you save each pay period. Again, it all depends on how much money you need to keep.

Create a Savings Goal

If you’re serious about saving up for something big, such as a down payment for a house or car, then create multiple saving goals. Each week, try to save $10 toward your larger budget plan.

What is the 50 20 30 Budget Rule?

This is one of the most simple budgeting rules I’ve ever seen. In fact, in my experience, I never used to stick to it. But once I got a hold of this concept and began using it every month, my life became much more accessible.

Here’s how it works: You’ll divide your budget plan into three categories: 50%, 20%, and 30%. Once you get a handle on what goes where in the budget plan, you will determine how much goes into each category each month.

Think it Through

Once you get into the habit of sticking to a budget plan, you will realize how hard it is to create one by yourself. Before I devised this rule, I would spend all my money on one category. This caused me not to afford things like vacations or new clothes, which was less than ideal.

Once I started following this plan, I found I had more flexibility to spend that money. Now when it comes time for vacation, there’s something left over more often than not. That’s what a budget plan will do for you.

Define Your Goal

The first step here is to define precisely what you’re trying to accomplish. If you want to save up for a down payment on a house, figure out how much you need to make that happen and divide the amount by three to get your budget plan.

Determine Your Starting Point

Now it’s time to determine where precisely that 50% percent of your budget plan comes from. You’ll notice two categories listed above in our example: 20% and 30%. We will start by looking at the 20% category.

For this category, you can do whatever you want. You’re allowed to spend whatever amount of money that falls within that category each month, no questions asked!

Set a Goal

Once you have your starting numbers and the percentage of your budget plan going into each category, sit down and find something you absolutely must have this month. You’ll need to decide whether it’s a necessity, an indulgence, or something else. Then it’s time to figure out what percentage equals your budget plan. In our example, we made it to use up to $180 for necessities.

Creating a budget plan spreadsheet is a simple and efficient way to track your monthly income and expenses. You can even break it down into months or years, adding or subtracting from the number of categories you’d like.

Step 1: Add Rows

To begin, add some new rows for the categories you’ll be tracking. Our example includes food, rent, utilities, credit card payments, and entertainment. These are just examples of what you can use in your budget plan spreadsheet.

Step 2: Input your Data

In each row you added, input data for that category. In this example, we have added some formulas to the entertainment row to calculate the average number of times per month we go out.

Step 3: Update your Numbers

Now, as each month goes by, all you have to do is update your data and then look at how you’re doing overall. As you can see in our example, we have put together a few scary trends with our credit card and food spending.

So to stay on track, we might want to cut those amounts down a bit. Saving money can be incredibly difficult, especially if you don’t know where to begin. That’s why it’s so important to set yourself up for success from the very beginning.

Save More Each Month on Basic Living Expenses

First, you’ll need to establish exactly how much you currently spend each month on all of your non-food-related basic living expenses. These could include things like rent or utilities and any other bills or fees with typical living expenses.

After identifying these categories, start looking at ways of cutting back on them. Think about ways you can get the same service for less. Now, this may seem like a lot of work at first, but trust me, it’ll only take an hour or two to look through all of your bills and identify where your money is going. It’s worth it to get ahead in the game financially!

Once you’ve gotten an idea of what you’re currently spending and have devised some saving plans, set up a savings account at the bank, and start depositing some cash every month, don’t worry too much about where to save at first – stick with something simple until you get the hang of everything.

Get a Handle on your Food Spending

Now that you’ve figured out saving money on your basic living expenses, it’s time to track down where all of your money is being spent. Most people spend way too much on food, so this category is usually the easiest to save some cash.

If you can’t afford the essentials at first, then leave them out and figure them in, in the future, when you have more cash saved up. Now it’s time to look at these categories again and see what other areas you can cut back on or find less expensive alternatives.

How Do I Track my Spending on the Go?

The best way to track your spending is to get a smartphone and an app that lets you bring up your spending. It’ll be a lot more convenient than having to print out reports, and it’ll help you stay on top of your budget plan.

How Do I Track my Spending?

Start by going through your regular bills and identifying which ones should be included in this process. It’s best if these bills are all connected to the same account, so make sure that’s the case with yours. Then take pictures of each bill after reviewing it and save them on the app or the website so that you can use them later on when it comes time to input data.

How Much of my Expenses Should I Leave Out?

To make the most accurate budget plan, you need to allow for expected monthly, unexpected, fixed, and fluctuating expenses. Expected monthly expenses mean you wish to pay these bills every month. For example, phone, car insurance, and utilities are typical monthly expenses.

Unexpected Expenses are anything that comes up from nowhere, such as any unexpected repairs or replacements done on a vehicle. These do not affect your regular spending patterns but can be added in when you input your actual spending data after the fact.

Fixed Expenses

Fixed expenses are anything that you pay for regularly and are not something that often changes, if at all. For example, these could include your phone bill, car insurance, utilities, and a home mortgage. Fixed expenses usually decrease and increase in line with income fluctuation or the cost of living in your area.

For example: If you move to a new place, your utility bills will be higher until you find more efficient ways to manage them or make use of cheaper alternatives. If you earn more money than raises, your fixed expenses will increase to keep up with the rest of your spending patterns.