Creating a Budget That Works for You
Creating a budget that works for you is the best way to take control of your financial future. The right budget allows you to track your spending, see where your money is going, and adjust to save for your future goals. Creating a budget can feel daunting, especially if you’ve struggled with money management in the past. So, we’ll share tips on how to create a budget that works for you and optimizes your personal finances.
Assess Your Current Spending
Before you can create a budget, you need to know how much money you’re spending. Take a couple of weeks to track your spending by observing your monthly income and corresponding monthly expenses. Try to categorize all your spending into essential categories such as food, rent/mortgage, utilities, transportation, and debt payments. Then compare your total spending to your income to see if you have a deficit or surplus.
Once you’ve tracked your spending, it’s time to take a closer look at where your money is going. Are there any unnecessary expenses you can cut back on? For example, maybe you’re spending a lot of money on eating out and daily coffeeshop visits. Once you’ve identified these areas, construct a plan to cut back. One way to do this is to set weekly or monthly spending limits on non-essential spending.
Additionally, many people have recurring subscriptions and other monthly memberships that can quickly add up. Take an inventory of the subscriptions you have and prioritize which ones you need. For those you don’t need, cancel them, and shift your money to other areas of your budget.
Set Your Financial Goals
It can be difficult to stay financially stable in today’s world with increasing expenses, lifestyle changes, and social pressure to spend money on the latest trends and experiences. However, setting financial goals can give you a target that makes it easier to complete the necessary changes and sacrifices to your budget.
Ask yourself what you want to achieve financially in the next year, five years, or ten years. For instance, creating an emergency fund should be one of your first goals. This’ll help you prepare for unexpected expenses such as medical bills or car repairs. Your financial goals can be short-term, such as paying off debt or saving for a vacation, or long-term, such as saving for retirement. Once you have your goals in mind, you can start making a budget that works towards those goals.
Create a Fine-Tuned Budget
Creating a budget may seem daunting, but it doesn’t have to be. Start by allocating your monthly income into categories such as housing, food, transportation, and other expenses. Make sure to include a category for your family’s savings, insurance, and investment needs. Policies like life, accident, and disability insurance are all worthy considerations for any family’s financial planning.
You can allocate a percentage of your income towards each category, depending on your financial goals. However, make sure that your expenses do not exceed your income. A good rule of thumb is the 50/30/20 rule, where 50% of your income goes to necessities, 30% goes to discretionary expenses, and 20% goes towards savings and investments.
Follow and Periodically Adjust Your Budget
Sticking to your budget will make all your planning and other efforts worthwhile. Use a budgeting app or spreadsheet to keep track of your expenses, monitor your progress toward your goals, and plan adjustments to your spending. For example, if your grocery bill is exceeding your budget, you can try meal planning or using coupons to save money. Sticking to your budget may require discipline and sacrifices, but the long-term financial benefits are worth it.
Additionally, your financial situation may change over time, such as changes in income, unexpected expenses, or changes in your financial goals. Review your budget monthly or quarterly to properly adjust your spending or savings. Remember, a budget is not set in stone and can be adjusted to meet your changing financial needs.
Reach out to Discuss Your Financial Goals
Creating a budget that works for you is an essential step toward financial stability and success. By assessing your current finances, setting your financial goals, and following a fine-tuned budget periodically, you can take control of your financial future. Remember, creating a budget is not a one-time event, but an ongoing process that requires discipline, patience, and commitment. With these tips, you can create a budget that works for you and achieve your financial goals.
If you’re unsure of how to plan for your family’s financial future and safety, then we’d recommend reaching out to our financially focused team. We’re proud to provide Nebraska & Kansas with expertly customized insurance and financial offerings that work for our clients.