You sat down, whipped up a budget, and thought you were finished. But something’s still not quite right. Maybe you keep running out of funds before you reach your next paycheck. Maybe you’ve decided you need to start saving more for a long-term financial goal. Whether you’re in a place of instability or financial security, chances are you’ll need to adjust your budget regularly.
Here are three steps to crafting a beneficial budget:
- Assess Your Spending: Track your spending for a week, or if possible, for an entire month. Review your receipts and bank statements. Avoid “splurge” purchases, and instead focus on buying only what you need. If you can weed out excess spending, you can increase the amount you can save. Stop using your credit cards if you’re in debt, and make space in your monthly budget for debt repayment.
- Assess Your Plan: How much have you budgeted for household expenses and an emergency fund? You should ideally plan to spend under 50% (or even better, less than 30%) of your income on bills and necessities. Save at least twenty percent of your income monthly, keeping in mind your timeline for your savings goals. If you’ve already assessed your spending, you’ll have a much easier time creating an accurate, updated plan.
- Increase Your Budget: Consider increasing your income. Many people pick up a second career to help them pay their bills, be prepared for emergencies, or increase their savings and spending power. A second career, while a commitment, is a reliable way to boost your budget and reach a place of financial security.
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