Have a goal
It’s important to have a reason for budgeting. The best place to start is by having a finish line in site: your savings goal. By setting a savings goal, you’ll have the motivation to stay on top of your finances. A savings goal could be a holiday, renovations to your home, or a new vehicle purchase. Once you have a reason to save, a budget will help you track your progress and keep you accountable.
Track spending for a month
When you’re starting a budget, it can be hard to spot all the incidental payments that eat away at your savings. It’s important to try and plug these ‘money leaks’, and a great way to do this is by tracking your spending for a whole month. You’ll notice things you likely miss like purchasing take-away, drinks, or other irregular payments. You can track your spending by checking your account transactions or by keeping the receipts of purchases and calculating at the end of the month.
Over a longer period, these payments can make a big dent on your savings, so by identifying them earlier on, you can start making changes to help your savings.
Keep it simple with the 50-20-30 approach
The best way to keep using a budget is to keep it simple by sticking to a rule for spending. One great rule to budget by is the 50-20-30 approach.
What this means is putting 50% of your income towards essentials like bills, food, mortgage or rent and transport; 20% towards savings and debt repayments; and 30% towards the things you enjoy. That way, you’re keeping on top of your mandatory expenses, but steadily building your savings.
Take action
A budget helps you plan for future expenses and grow your savings. However, a budget alone is just a ‘strategy’ – it’s up to you to act and implement those strategies! To help you stick to your budget, you may want to set reminders to check your spending or have a friend or family member check-in about your savings goals.
Have a separate account for spending vs saving
If you are finding that your spending is regularly eating into your savings, consider opening a savings account that is separate from your regular spending account.
Plan for the unexpected
It’s worth looking ahead to the big expenses that you have coming up. These could be vehicle repairs or medical expenses. Being ready for these expenses will help you plan and ensure you have money available when needed. This will ensure you aren’t caught off-guard and out-of-pocket, reducing stress in the long run. You can start by setting aside small amounts weekly to make sure there’s enough to cover the cost when the bills arrive.
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