Creating a monthly budget is an essential step if you want to live comfortably on your income and improve your financial future. However, designing a realistic budget that does not restrict you often feels like a daunting challenge. Use these four steps to create a realistic budget you can stick to and save money each month.
1. Track Your Expenses
Before you can set a budget, you need to know exactly how much money it takes to live comfortably each month. Make a list of necessary expenses such as your house mortgage and car note. You should also include expenses from when you send money home to family living abroad. These reoccurring expenses should be expected each month, so listing all of them gives you a good idea of how much money you need at a minimum to get through the month.
2. Know Your Income
Once you have a solid understanding of how much money you spend each month to live comfortably, you realize how much cash you must generate on a monthly basis. If your current job does not provide you with adequate income, you must either start looking for new employment or find ways to generate additional income so you can cover your expenses. There are many types of side gigs available that can bring in some extra money without costing you a lot of time and energy. The key is just to ensure that your monthly income is greater than the sum of your monthly expenses.
3. Allot Yourself Some Fun Money
It’s hard to stick to a monthly budget if you never have extra money for fun expenses such as coffee, clothing, or books. You don’t have to give yourself a lot of spending money each month, but allowing a small sum for fun expenses is the best way to keep yourself from feeling like your budget is overly restricting.
If you can never afford a coffee or purchase the newest book from your favorite author, you are more likely to overextend your budget when you get tired of following the structure. Giving yourself a little money to spend on unnecessary expenses each month puts the money in the budget so you don’t overspend but it also prevents the feeling of deprivation.
4. Forgive Your Mistakes
Unexpected expenses pop up occasionally and cause you to spend more money than you plan. When this happens, it’s easy to forget about the budget and buy extra items you want because you feel bad about your past financial choices.
Part of budgeting responsibly is forgiving yourself for your past financial situations. Instead of blowing your entire budget for the month because you made an unnecessary purchase, forgive yourself for the mistake and try to get back on track as soon as possible.
If you want to improve your financial situation and stop living paycheck to paycheck, you must set a monthly budget and start paying down debt. Learning to live on a budget can be challenging, but if you use these four tips, you can set a realistic budget that doesn’t make you feel restricted.
Alexia is the author at Research Snipers covering all technology news including Google, Apple, Android, Xiaomi, Huawei, Samsung News, and More.