The Importance of Budgeting and Services That I Use
Budget – An estimate, often itemized, of expected income and expense for a given period in the future.
Before you start to invest, save or begin to tackle debt you need to set up a plan. Budgeting sets up a structure that simplifies your money management. This technique allows you to see where your cash flow and expenses are going. Budgeting does not have to be some boring, complicated thing only meant for organized people. I think of budgeting as a stepping stone to planning a great financial future. You pretty much want to make sure you’re not spending more than you’re earning because that’s hustling backwards and blowing too much money.
You can budget your fun in advance. If you know you’re planning to pay $500 for a big purchase you can set up a rollover budget via mint.com for a specific category 5 months ahead of time at $100 a month. Then when it’s time to make the purchase, that transaction wouldn’t throw off your current month’s budget. For example, if you set aside $200 a month for clothes and only spent $100 one month, the next month you’ll have $300 to spend on clothes because that $100 you left rolled over. Here’s an example with my movie’s budget, I have $47 available to splurge at the movies.
Also, It’s not the end of the world if you go over the budget. Budgeting is designed to give you a guideline on how to control your spending. I personally track every single purchase and dollar that I make monthly. My saving/investing rate varies from 7% to 30% depending on my expenses for that current month. But no matter what I always try to save at least 7% of my salary. If you’re having trouble financially and don’t know where to begin, try to start by saving at least 1% of your salary. EVERYBODY CAN SAVE AT LEAST 1 PERCENT I DON’T CARE WHAT YOU SAY. Then as the months go by gradually increase this amount.
“I pay myself first before I pay anything else!!!”
It’s always best to pay for a car in cash and for housing to save money you can always get a roommate. For me as a person who lives alone and likes to drive nice cars, it is vital that I follow a budget. When it comes to housing I try to keep my overall expenses to less than 33% of my salary. For cars, I try to keep it at less than 15% of my salary. This includes insurance, utilities, and maintenance. So if you’re making $55,000 per year your max monthly housing expenses should be no more than $1,500 for rent/mortgage and bills. For cars, it would be around $680 max for your car note, insurance, and gas. I’m going over these two because it’s usually the biggest monthly expenses for millennials. Always remember the less you spend on major expenses, the more disposable income you’ll have to tackle debt, invest or save for your financial goals!!
Some people like to take a more simple approach to budgeting by saving a certain amount of their monthly income, paying for their necessities, then just doing whatever the hell they want with their leftover income. Whichever works for you is fine as long as you’re making strides towards a successful financial future.
The one great thing about technology nowadays is that there are apps that will do all of this tracking for you. Here are some free services that I use.
I personally use all of these apps because I’m obsessed with budgeting lol but please feel free to comment with any other free services that you use, let me know how you budget.