Budgeting like a boss
Living paycheck to paycheck can be stressful. Having to sacrifice your comfort to make it to the end of the month should not be the life we live in. Making a list of maximum budget allocations and saving a fraction of your monthly pay can help you worry less about your financials.
Firstly, everyone has their preferred method of saving. No technique will work for every one of us, but all of us can adapt saving methods to our accommodation.
Having a goal
With a goal, many save for one thing at a time rather than for many items simultaneously. By setting a small percentage of your monthly income, luxury items such as a new phone, designer clothes, or a new car will be easier to achieve. With this method, seeing the amount getting closer to the desired goal will serve as an incentive to stay disciplined in the money you spend.
50-30-20
This method is a widespread method to help people budget their needs, wants and savings. This rule recommends putting 50% of your income towards needs (ex., food, shelter, petrol), 30% towards wants (ex., entertainment, travel, gym memberships) and the rest, 20%, into a savings account. This method should be amended to the comfort and expenses of one's income to satisfy all factors. Those with more than 50% of their income occupied by their needs may alter the other two percentages accordingly. On the other hand, people who have fewer demands or needs may increase any other factor.
Create a second income
Relying on only one income can be risky at times. As past events have shown us, having a backup plan is always a good idea. By working a few extra hours, this second income would help you live with fewer financial struggles and be able to save up faster. Although this is not ideal for those who work long hours, there are plenty of part-time opportunities, including work-from-home and others who offer very few hours a week.
Have a look around
There are many versions of items created by different manufacturers. One shop can sell the exact item as others for double the price. Looking around different local/ online shops (when possible), there is a greater probability that you find a cheaper item or a better quality. Also, there is no need to buy new ones constantly. Many people sell used items like furniture, collectables, and clothes which are still in good condition. Purchasing second-hand items also reduces future waste creation.
Envelope System Budget
This method is excellent for those who struggle to stick to a budget to be more mindful of their spending. As indicated in its title, this system uses envelopes to divide money according to the monthly expense. At the beginning of the month, when you receive your income, list down all your expenses for the coming month. Put cash in the envelopes according to how much you have calculated you will be spending. For example, if you plan €250 per month on groceries, you can put around €250. The downside is that if you go over budget in one of the categories, you will have to deduct money from the others. Be careful to avoid such a situation, as this will lead to a snowball effect and result in running out of cash before the end of the month.
Budgeting isn't always fun, but it's one of the most important things you can do to improve your financial health. Here are a few ways to make a difference living on a budget.
Firstly, everyone has their preferred method of saving. No technique will work for every one of us, but all of us can adapt saving methods to our accommodation.
Having a goal
With a goal, many save for one thing at a time rather than for many items simultaneously. By setting a small percentage of your monthly income, luxury items such as a new phone, designer clothes, or a new car will be easier to achieve. With this method, seeing the amount getting closer to the desired goal will serve as an incentive to stay disciplined in the money you spend.
50-30-20
This method is a widespread method to help people budget their needs, wants and savings. This rule recommends putting 50% of your income towards needs (ex., food, shelter, petrol), 30% towards wants (ex., entertainment, travel, gym memberships) and the rest, 20%, into a savings account. This method should be amended to the comfort and expenses of one's income to satisfy all factors. Those with more than 50% of their income occupied by their needs may alter the other two percentages accordingly. On the other hand, people who have fewer demands or needs may increase any other factor.
Create a second income
Relying on only one income can be risky at times. As past events have shown us, having a backup plan is always a good idea. By working a few extra hours, this second income would help you live with fewer financial struggles and be able to save up faster. Although this is not ideal for those who work long hours, there are plenty of part-time opportunities, including work-from-home and others who offer very few hours a week.
Have a look around
There are many versions of items created by different manufacturers. One shop can sell the exact item as others for double the price. Looking around different local/ online shops (when possible), there is a greater probability that you find a cheaper item or a better quality. Also, there is no need to buy new ones constantly. Many people sell used items like furniture, collectables, and clothes which are still in good condition. Purchasing second-hand items also reduces future waste creation.
Envelope System Budget
This method is excellent for those who struggle to stick to a budget to be more mindful of their spending. As indicated in its title, this system uses envelopes to divide money according to the monthly expense. At the beginning of the month, when you receive your income, list down all your expenses for the coming month. Put cash in the envelopes according to how much you have calculated you will be spending. For example, if you plan €250 per month on groceries, you can put around €250. The downside is that if you go over budget in one of the categories, you will have to deduct money from the others. Be careful to avoid such a situation, as this will lead to a snowball effect and result in running out of cash before the end of the month.
Budgeting isn't always fun, but it's one of the most important things you can do to improve your financial health. Here are a few ways to make a difference living on a budget.