Budgeting Your Money
What is budgeting?
Budgeting is a financial planning system that you create so you know what your money is being spent on. A budget can be weekly, monthly, or yearly.
E.g. : X amount of my paycheck goes to groceries.
X amount of my paycheck goes to rent.
And
X amount of my paycheck goes to insurance.
Why is budgeting important?
Budgeting is important because it can help inform you, day-to-day, about your money, and what you can afford to spend. It is also a path to paving the way for a time when you want/need to make bigger purchases such as cars, appliances, houses, or vacations!
How to start a budget:
A good way to begin is by keeping track of what you spend your money on in a month. You want to use a relatively ‘normal’ month (not holiday shopping months, or months where there’s a lot of ‘extra’ spending going on that you wouldn’t normally be doing). So, for the month that you’re going to start tracking, keep your receipts. This is a good starting point to be able to see just where your money is going, and whether or not your spending habits are feasible with the amount of money you have at your disposal during the month. At the end of the month, add up what money you spent where, and compare that amount to what you have in your bank account.
Setting budget goals: This is an important step! It is important to know what you want to be able to save and what you want to spend in various places in your budget so you can move money around if you need to and are able. For instance: budget for ‘savings’ (it doesn’t have to be a giant amount, here I’ll be using $100, but you can raise or lower the amount as suits your own budget) and ‘extras’, whether that be going out to eat once a week, buying new clothes, or having a weekend away. Although these parts of your budget might not be doable right now, that doesn’t mean you can’t amend your budget later, as your financial situation improves.
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