Saving up for a dream vacation or paying off those holiday credit card debts can be a challenge. If you were to look up money saving tips online, every article will throw the word “budget” at you. These articles might demand you forgo that morning coffee, use spreadsheets to track every cent, and hoard every receipt and pay stub in your possession. But, building the perfect budget doesn’t have to involve such schizophrenic habits.
Budget building requires an awareness of your weekly (or bi-weekly) income and how it is being spent. Once you’ve settled that, you can start planning for your financial goals. Here are four tips for preparing a weekly budget.
Determine Income
The key to maximizing your funds comes through knowing how much you’re bringing in. All you’ll need is a pen, notebook, and maybe a calculator to calculate your total income. Start with your job salary, from there move on to tax refunds, cash gifts, and other payments you’ve received.
Determining your income will help you establish a personal spending limit. Part of your money troubles could stem from spending more than you take in. Make up a list of monthly expenses to compare against your income information to add some extra clarity.
The Big Three
There may be areas where you have to cut back. Most times it’s frivolous wants related to entertainment, clothing, or other luxury items. Other times, they can be specialty needs that affect your health or housing. Use the data you’ve factored to pick the three highest spending areas.
Once you’ve singled out which qualify as necessities and comforts, set aside a fixed amount for each. A smart amount would be 50% for necessities, and 30% towards luxuries. Remember to set aside 20% for savings.
Keep Separate Accounts
Overspending will be frequent threat no matter how strict you keep your budget. Part of what enables overspending is the easy access to spending money from one source. Discourage frivolous purchases, and protect your vital income, by dispersing funds across several different accounts.
Keeping separate bank accounts will make it easier to diversify your income. One checking account can be used for paying monthly bills, while another should be reserved for casual spending. Multiple accounts are also a smart security strategy. If you do a lot of online transactions, then it’s best to use an isolated savings account that won’t jeopardize your main cash flow.
Save on Daily Expenses
Depending on your outlook, finding ways to save money can be a craft all by itself. Some will recommend shopping at places like Dollar General for cheap deals, but they’d be taking the obvious route. There are plenty of deals the be found at your local stores through loyalty programs.
Anywhere from grocery to clothing stores have special loyalty membership programs that can save you money. Using membership cards can net you reward coupons for household brands. If your credit rating is good, consider getting a rewards credit card that has a cash back program.