Having a plan for every dollar in your paycheck is one of the keys to success. Not only does this make you more responsible for your finances, but it also ensures that you reach your financial goals one step at a time.
Creating a budget can seem daunting and downright scary, especially if you are new to this. However, now is a perfect time as any to help you jumpstart your budgeting while taking a closer look at your lifestyle.
For those who are starting from scratch and want to stick to their financial goals, here’s how to make every dollar in your paycheck count. Take a look at some of these tips today.
Calculate Your Monthly Expenses Even Before the Month Begins
While this approach can be overwhelming for some, this allows you to set your affairs in order and think ahead about what lies in the month. To do this, keep tabs on your commonly fixed and monthly expenses, including your rent, mortgage, utility bills, insurance, and the like.
After factoring each essential aspect, such as your electricity, groceries, rent, and other expenses, you can add discretionary or optional expenses you rely on. Items that can go under this category are subscription services as well as dining or entertainment spends.
By calculating what your monthly expenses are even before the month begins, you have a general idea about how you should proceed to budget. Likewise, this expense list will give you more insight into your spending, and if possible, decrease the bills you can remove altogether.
Try A Simple Approach To Budgeting Every Dollar
Budgeting every dollar does not have to be intimidating. One way to ease you into this type of lifestyle is by using the 50/30/20 budgeting rule. This means that 50% of your paycheck is automatically allocated for your needs or essentials, including rent, utilities, insurance, food, and the like.
Meanwhile, 30% can be allocated for wants, such as shopping, entertainment, dining out, and even funding your hobbies. The remaining 20%, on the other hand, should go towards your savings. This is an easy rule to remember.
You may also want to try a zero-based budgeting approach where you can subtract your expenses from your income until you reach zero. However, this does not mean that you should spend until your bank account reaches zero. This only means that every dollar should have a place in your budget.
Track All Of Your Expenses
Speaking of giving every dollar a job to do, one way to keep on top of your finances is to track all your expenses. Although this can be a challenging and eye-opening activity, this can ensure you stay within your means and make sure you reach your financial goals.
Gone are the days when you have to input your spending manually. There are budget apps or trackers you can use to hold your spending accountable.
By accounting for even the smallest expenses into your daily routine, you’re setting yourself up for success. Plus, you know how much money you have left in your account, allowing you to adjust your spending accordingly. This can also help you prioritize what you need from those that you don’t.
Consider Automating Bills Payments And Savings
Technology certainly has come a long way from the olden days. With banking apps, you can finally automate your savings and bills payments. Automating your money eliminates your worry and gives you the peace of mind you deserve knowing you have paid the bills and have saved money in your account.
While this concept isn’t wholly new, this approach ensures that the money you’ve allocated goes into the right account without much effort.
Now that you know how to make every dollar of your paycheck count, you can now jumpstart your budgeting journey. In no time, you can make meaningful changes to make your financial plan a success.