Budgeting for Beginners
When it comes to money, everyone has different spending habits. Some people are savers, while others are spenders. And then there are those who fall somewhere in between. But regardless of where you fall on the spectrum, one thing is for sure: everyone can benefit from creating a budget.
A budget is simply a plan for how you will spend your money. It involves setting goals and making choices about what you will and will not spend your money on. Creating a budget can help you make the most of your income and make better financial decisions overall.
If you’re not sure where to start, don’t worry! We’ve got you covered with this beginner’s guide to budgeting.
Start by evaluating your current financial situation.
Take some time to sit down and look at your income and expenses. This will give you a good starting point for creating your budget. Make sure to include all sources of income, even if they are irregular or variable. Once you have a clear picture of your current financial situation, you can start setting goals.
What do you want your budget to achieve? Do you want to save money for a rainy day? Put away money for retirement? Pay off debt? Make a major purchase? Whatever your goal may be, make sure it is specific, measurable, achievable, relevant, and time-bound (SMART).
Now that you know what you want to achieve with your budget, it’s time to start making choices about how you will spend your money. This is where things can get tricky, but don’t worry—you can do it! Start by categorizing your expenses into fixed and variable expenses. Fixed expenses are things like rent or mortgage payments, car payments, and other regular bills that stay the same each month. Variable expenses are things like groceries, entertainment, and clothing that may fluctuate from month to month.
Once you have categorized your expenses, prioritize them in order of importance. Your necessary living expenses should always come first, followed by things like retirement savings and debt repayment. After that, you can start allocating funds for things like entertainment and vacations. Remember to leave some wiggle room in your budget for unexpected costs!
Save Save Save!
One of the most important aspects of budgeting is saving money. Try to put away at least 10% of your income into savings each month. If that seems like too much all at once, start with 5% and gradually increase the amount as you get more comfortable with managing your finances. You can also set up automatic transfers from your checking account to your savings account so that you don’t have to think about it—out of sight, out of mind!
Budgeting takes practice and patience, but it is well worth the effort! Creating a budget can help you take control of your finances and reach your financial goals—whatever they may be. And if you ever find yourself struggling to stick to your budget or make ends meet each month, remember that there is always help available from certified financial planners or wealth management consultants like us here at YMA Wealth Management!
Setting—and sticking to—a budget can be tough, but it’s definitely worth it in the long run! Creating a budget helps take control of finances as well as reach financial goals difficult as it may seem at first. The most important part of the budget is saved10% per month into savings though starting with 5% and gradually increasing the amount saved monthly works too. If staying on track with a monthly budget seems impossible, consider talking to certified financial planners or wealth management consultants!
