When planning a budget, you may use standard categories like housing, transportation, utilities, and the like. But here comes the reality of living—it doesn’t all fit in a set category.
Budgeting gives you a clearer vision of your plans and goals, of the things necessary and not.
It is easy to get a pen and a piece of paper and to write down categories to budget your money. For example, you want to create a category for budget for your car insurance, water bill, electric bill, groceries, etc. But it’s not as easy when there is an immediate major price hike on the products and services you regularly use, such as the gas for your car, electricity, health insurance or the price of your favorite vegetables.
So you have to keep price fluctuations in mind. A good rule of thumb might be X% over your standard budget for times when prices rise unexpectedly.
Other things that you need to budget for are some “I want” items. Maybe you really want to get new curtains or a shiny new duvet; maybe you want to have your nails manicured, your room re-painted, or eat in a cozy diner or buy a secondhand Hermes bag. You deserve to be able to have these things and putting them in your budget will make sure you have the funds for them. It will also control your spending on them at the same time.
The last area that is important to keep in mind are events that you may need to budget. You may be attending a bridal shower, a baptismal celebration, or someone’s 50th wedding anniversary.
These types of events also need a category. If you budget for them throughout the year, you will have the funds allocated for these things and you won’t break the budget when they come up. Your budget needs to have these extras in them to be realistic.
Here are few things to remember in budgeting your money so that you can achieve your realistic budget goals.
1. Save more than what you spend.
However cliché this sounds, it is true every time. When you save more of your earnings, you can be relieved when spending the rest of your money. Saving is always a good idea, though sometimes it’s the person’s choice to spend that ruins it. It’s your choice, so pick the best option. Choose what makes your mind at ease in situations that may blow your budget.
Remember, it is better for you to have enough funds to get you through the rainy days rather than scratch your plastic and then wait for the credit card statement…(only to find out that you have overspent, yet again).
2. Identify your needs from your wants.
This is very sensible advice. When you find a bag on sale or a glittery pair of shoes displayed in the window of the thrift shop, even though they are really gorgeous, always keep in mind that you have more important things to spend for, and don’t give in to temptations or impulses to buy unnecessary things.
You might as well bargain with yourself. Aside from saving for your emergency fund, save a little more this month and buy that bag or shoe next payday. When that day comes, assess if you still want it. Chances are, you won’t, and you will be saving a lot more than what you expected.
3. Be conscious of your calendar.
Scrutinize your calendar and look at what’s coming next month. Check if you do have medical appointments or birthdays and gatherings to attend. If you do, plan and make a checklist of the things you might allocate your money to for those days, and include it in your next month’s budgeting.
When saving, it is also recommended by financial experts that one must invest a part of your savings to have it grow over time. While you are saving, you are also earning.
5. Anticipate worst-case scenarios ahead.
Save for the unexpected. Come to think of it, those huge, unexpected problems in the future might cost you a lot. This is applicable, especially with health emergencies.
Once you prepared for a bigger blow, it is more likely that you will be ready in case it happens.
6. Every dollar should get a name.
Use the physical envelope system for your budget. This is a good option for persons fond of using cash instead of debit/credit cards. However, for people who do not use cash, there is an online banking option such as virtual envelopes. There are apps like mint.com that help you with this.
7. Relax and have fun!
Do not ever let your money control you. However clear your plans are when you budget, it is not a bad idea to reward yourself sometimes with a little indulgence from all this healthy budgeting.
At the end of the day, what you do with your money is your choice. To truly achieve your budget goals, always be remember your hard work, short- and long-term goals, and unexpected events so that you will be very cautious when you spend.