Sometimes, it’s hard to control our money. Especially if we don’t know how to. But these budget tips will help you out with your financial problems.
The lack of a budget
We all know that we should be saving and investing but a frightening seven out of ten Americans have less than $1000 in savings.
That means that most people don’t have the resources to cover a $500 emergency, like new brake pads or a dental emergency. And while the reasons why we fail to save may vary, at the heart of most of them is poor money management.
In 2013 researchers found that nearly 60% of Americans did not have a budget. That number has reversed itself in recent years with nearly the same number (60%) reporting that they DO budget.
That still leaves more than a third of all Americans making financial decisions without a financial road map.
And the reasons for not budgeting usually fall into two categories.
The first group is those who can’t be bothered, either because they find it boring or because they are busy people with limited time to devote to such things.
The second are those that are scared away from budgeting because they lack the knowledge or the confidence to do it well. For either group, there is a simple solution.
The 50/30/20 rule
This formula is the ideal budget. Ideally, 50% of your post-tax income should go towards necessities. This includes things such as rent, food, and transportation.
The following 30% should be devoted to the things you want. This includes entertainment and non-essential shopping. The remaining 20% goes into your savings account.
Chances are, your spending habits are far from ideal. Many Americans pay too much in housing costs or devote too little to savings.
Others have a hard time prioritizing. Regardless of your current financial situation, there are a few easy steps to get your budget back on track.
5 Budget tips for the busy entrepreneur
1. Track everything
Right now you probably have no idea where your money goes.
Take a week, or a month and simply track your spending. There are several apps that you can download for free that will do just that. They will track and categorize your spending habits so that it is one easy to read the chart.
This is one of the most important budget tips of this list. You need to know where your money goes.
2. Trim the fat
Now that we know where your money is going, it’s time to decide what you can live without.
Clearing up credit card debts should be your first order of business. Bring your coffee instead of buying it. Plan your week’s meals.
Switch to a cheaper cable plan, or get rid of cable altogether. Go online and shop around for cheap insurance quotes for your car and home. Chances are you can bring down your utility bills as well with a few minor changes to your lifestyle.
3. Increase your bottom line
There is a good chance that even after reducing your outgoing expenses, you still need a few extra dollars.
This is especially true if you have debts that need repayment.
Take your boss up on that over time offer. Get a part-time job. Or, take this as an opportunity to freelance. Many great entrepreneurs began as freelancers, doing what they loved in their spare time.
4. Automate everything
Lower the barriers of resistance by automating as many of your expenditures as possible.
Don’t forget to pay yourself as well. Make your monthly transfers to your saving account an automated deposit. Treat it like a bill.
This way you don’t hesitate to save. Start with an amount you know you can easily afford, and slowly increase it as your situation improves.
One trick is to have your spending money deposited into a separate account so that you don’t blow your budget by accident.
5. Reward yourself
Keep tracking your spending. Set monthly and quarterly goals, and then reward yourself for meeting them.
Perhaps you splurge on shoes after paying off your credit card.
This simple plan doesn’t require you to be a mathematician to figure out and doesn’t require hours of balancing checkbooks and detailed spreadsheets.
But, if you follow the budget tips and bravely face your financial reality, you’ll surely have a better control over you money
Leave your opinion in the comments below and let me know if you have more budget tips I’ve missed.