Budget. A lot of us cringe at the very sound of it. But honestly and truly it’s one of the best things you can do in life. It will keep you constantly prepared and best of all keep money in your pockets. It’s also a lot easier than most people think. I made the decision to start following a strict budget a year ago and have to say things have been going a lot smoother for me financially and mentally. Because realistically, no matter how much money you make, you’ll never have enough if you don’t budget properly.
So where do you start? Well here are a few things you can do:
Write down all of your bills with the due dates written next to them (This will later help you to divide spending power based off your due dates and your pay periods).
Think of how much money you spend on gas, food, household products (including toilet paper) weekly. Add those costs together and that will total your weekly expenses. See example below.
Subtract your monthly bills and monthly expenses from your monthly income. The remaining money is how much you have available to save. Now here’s the important factors that determine what savings plan is best for you. Your bills due dates and your pay periods.
For example, let’s say you get paid bi-weekly in the amount $1,500 and your total bills that fall in between that pay period and the next total to $500. Your rent is $1000 a month so you split it between 2 pay periods ($500). And your weekly expenses are $100 ($200 for 2 weeks on a bi-weekly schedule). That’s a total of $1200 in bills and expenses for that pay period that you will need to deduct from your check ($1500 - $1200).
That leaves you with $300 to save that pay period. But of course you want some type of social life or entertainment so put aside another $150 for that. That now leaves you with $150 to send to your savings account. Depending on what bills are due during your second check of the month you could possibly save another $150. And that would be $300 saved for the month. Figures will vary based on your income vs bills. See example below.
So here are the yearly savings figures using this method:
$25/bi-weekly = $650 a year $25/weekly = $1300 a year
Of course you can add more to your bi-weekly savings to achieve the same amount (or more) as you would weekly. And trust me you’ll forgot you even HAD $25 when it never had a chance to touch your account. Now in my case I’ve chosen to have multiple savings accounts with different amounts of money drafted on my paydays. I have different savings accounts for different purposes.
So wherever I can save a penny (literally) here and there I do. I even have a designated checking account for my car payments. My monthly payments are almost to nearest next 100th dollar so I deposit that full amount each month and when the car payment is drafted that leaves a leftover $4.54 a payment. When I’m completely done paying my car off I’ll have a leftover $250 sitting in that account. Woop!
I’m sure you get the idea by now. Point is…saving is very attainable. Create a plan that suits your income and lifestyle and it will become second nature.