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Having a budget is a huge step in anyone’s financial journey. But as you continue your journey you question if you are saving enough money back. Here are a few tips to help improve the effectiveness of your monthly budget.
- Go Digital
Let’s take a deeper dive into each tip so you can get the most out of your monthly budget.
Budget Planner tips to save you a ton of money, and time.
Below are 5 easy tips broken down in detail to help you with your monthly budget. Budget planning is essential and when done properly can help you reach your goals quickly. Let’s get focused on the effectiveness of our budgets!
Money is bendable, foldable, and it rolls with the punches. So should our budgets. We need to be aware that things can happen, and allow the same kind of flexibility within our budgets. A rigid budget isn’t very useful because it constricts your abilities and limits your capabilities to pay off debts or save more for the future. A rigid budget is also one that is less likely to be followed. Building in flexibility allows for more accuracy and better results. Allows for any “extra” money to be allocated to your debt snowball, or maybe to your sinking fund for a new car! Maybe it’s been a great month and you’ve saved double what you expected too, time to treat yourself a little bit. If you have a rigid budget, it makes things complicated and we all know something complicated is something we most likely will refuse to continue doing. Learn more about budgeting at SoFi.com.
Money cant physically talk, but we should all be talking about it! A budget requires spending decisions, and these need to be communicated about early and often. With your partner, you should make decisions and keep an open line of communication about big purchases you wish to make. You should also be transparent with your investment firm and let them know your decisions. If you have $50,000 you are wanting to invest today, and want to purchase a house with its yield in 3 years, your investor needs to be aware that this is a rather short-term investment and you are seeking serious gains on it. Without this information your investing agent will capitalize on long-term growth, in 3 years it may only grow a few thousand dollars. This is why communication has to happen early and often between each party that is involved in your finances.
When budgeting, be very clear about your goals. Forecast how much money you will need for retirement, car expenses, education, and home loan. Make sure these are realistic forecast predictions and not just random guesses. Once you have your forecast then set down a savings schedule to prepare for these goals. Make sure that you track everything! Don’t underestimate the importance of minor details. A 0.01% increase in savings can result in an exceptionally large amount of extra cash! Read more about setting long-term goals at investopedia.com.
You can’t plan for everything life throws at you but you can plan for a lot more than you think. Having a sinking fund helps you stay on track. This specialized savings account is money set aside for inevitable things, that you hope will never happen such as totaling your car or a trip to the ER. Planning goes farther than trying to predict the unpredictable, it also helps you realize that not every month is the same. You need to look at your calendar each month when making your budget, maybe you pay your vehicle insurance once a year, or you have 5 birthdays to attend this month that you need gifts for. These things are all planned expenses, but if you don’t look forward to what you’re doing this month you may find yourself not being able to save as much money as you would hope to.
5. Going Digital
For many of us, pencil and paper monthly budget planners are essential parts of our lives. We prefer this method, and that’s ok! What works best for one person may not work for another. The point of this tip is to let you know that there are digital tools available for those who just simply cannot keep up with writing everything down. Google Sheets is a cloud-based tool that has free templates you can use. (You can learn more about them here.) There are also a lot of applications for your phone that can help with budgeting. YNAB (You Need A Budget) is a great tool to help you get your finances in order digitally. This is a paid subscription, but it is cross-platform therefore you can keep yourself up to date on your computer, phone, and tablet.
Start using these tips to increase your budgeting potential.
Using flexibility, communication, goals, planning, and a digital product can greatly increase the effectiveness and the efficiency of your budget! You’ve come so far with your budget, take the next step in this journey and focus on making it more effective so you can reach your goals easily! You got this! Keep pushing forward.
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