Trying to figure out how to budget my money was one of my hardest struggles since I beginning working my first career position and starting my debt journey.
The major point to take away from how to budget your money is to make sure you create a budget that will work for you. While there are plenty of articles that can help you get started. It is up to you to make the final adjustments to fit your lifestyle.
THINGS TO THINK ABOUT
- Do you have children?
- Are you in school?
- Your income?
This “How to Budget Your Money” post comes from the mind of a 20 something single woman, with no children or pets and new attorney governmental salary. However, these tips on how to create budget are universal and can be applied to any individual no matter the circumstances.
RELATED POST: Finances Tips for Young Adults
HOW TO BUDGET YOUR MONEY
STEP TWO: ESTABLISH YOUR NET INCOME
One of the major steps when figuring out how to create a budget is to identify your net income. What is net income? This is the income you actually take on after taxes. For some, this step is extremely easy and for others not so much. If you have an irregular income please check out this article on how to budget with an irregular income.
MY TIP: For those of you without irregular incomes, try establishing a budget with your income that does not change and use irregular incomes aka extra money for other things like debt, savings or fun.
STEP THREE: ASSESS YOUR FINANCIAL SITUATION
You cannot create a successful budget your money if you do not assess your financial situation. Do you owe a ton of debt? Are you behind on bills?
No need to worry about what is fixed expenses and what is not. Just make sure you create a list of all your monthly bills and expenses, including debts.
STEP ONE: DETERMINE HOW YOU WILL TRACK YOUR BUDGET
One of the best things you can do when figuring out how to budget your money is determining how you will track your budget. Does writing things out help you plan better? Are you always on the go that you need your budget to go with you? Determining how you will be tracking your budget is a huge step in creating a budget.
I find that having all my budgeting data in one place makes it easier for me to track and keep up with my monthly budget. Grab a copy of my 2018 Budgeting & Income Tracker Spreadsheet when you subscribe to my blog.
STEP FOUR: ACTUAL BUDGET METHOD
There are multiple ways to budgeting your money. I find the following to budgeting systems the most helpful for newbies.
ZERO BASED BUDGETING METHOD:
This is the budgeting system that I use to budget my money. I like simplicity. With the zero-based budgeting method, all you do is subtract your total monthly expenses from your total monthly net income.
MY TIP: I include my monthly gas money, groceries, eat out money in my zero-based budget.
If you want to learn more about the zero-based budget method please check out this blog post.
50/30/20 BUDGET METHOD:
While not my personal favorite budget method, I included this method because it works. Under this budgeting method you are dividing your budget into categories: (1) Necessities, (2) Wants & (3) Savings.
50 percent of your income goes to the necessities: food, shelter, and transportation.
30 percent of your income goes to personal expenses: debts, dining out, memberships. These are things you may not necessarily need and you could go without should an emergency arise.
20 percent goes to savings. Nothing like having money put away for a rainy day.
I believe the most important thing to take away from this method is that your percentage may actually be different than others. For instants, maybe you spend 60% of your income on the necessity or maybe your own a debt journey and want to put a certain amount of your income towards debts. The goal, however, is to get your budget to a 50/30/20 system.