How to manage household on a budget?
“A budget is more than just a series of numbers on a page; it is an embodiment of our values”- Barack Obama
Saving when on a tight budget can be a challenging endeavour, as putting extra money aside when already struggling to make ends meet can seem impossible, but as it is often said, nothing is impossible; neither is saving. Budgeting is essential because it can bring you closer to your financial goals and helps you to avoid overspending as you try to meet the requirements of your budget to reap more significant rewards in the future. Other benefits include helping you be more equipped for possible emergencies that may occur in the future; it also gives you one less thing to worry about as instead of worrying about “How I am going to get through the month”, “ You will instead be comforted by the fact that you are financially prepared in advance and will be content that your budget and saving will help you through.
Tips on budgeting:
- Find out your Income
When planning a budget, the first thing to do is find out your take-home earnings; this should be how much you earn after tax and other deductions. This can be viewed on your payslip or through enquiring with your employer. You should also include any additional money you have coming in, such as rental income and any other jobs you may have. Including extra income and your salary will help make your budget more precise and reliable.
- Calculate spending
Once you have established how much you earn, you should allocate some money to a savings account by applying a save first spend later strategy. If you do not have a specific goal you want to save for, it is still important to save for rainy days.
- Apply Saving strategy
Calculate how much money is going to expenses such as bills. Once this is done, categorise your expenses into ‘needs’ and ‘wants’. After you have worked out your earnings and costs, see how much you have left. But it is recommended that you apply a spending strategy before a saving strategy. It is also a good idea to evaluate the expenses for last few months, as it will give a more realistic view on expenses. No matter how tight or disciplined one is, there could still be some fluctuations or spikes in the expenses due to occasional events. By doing an evaluation for last few months, one can easily find a true pattern of expenses.
- Don’t fantasise about your budget
Fantasying about your budget or spending more than your means will not bring you that step closer to financial stability or securing your goals. Therefore, it is essential to follow all the steps, such as knowing how much you earn and how much you really need to spend. The more you plan, the more it gets easier and enables you towards realistic budgeting.
There is a common budgeting rule, which is the 50/30/20 method.
Here’s how it works:
50% of your Income should be your most needed expenses, such as household bills/mortgage payments/childcare and other unavoidable and regular expenses.
30% for wants, such as clothes and holidays or any other desirable expense you would want to make for your personal satisfaction.
20% for savings.
This technique may be widely known but may not be the most efficient for everyone. So you really need to evaluate your personal circumstances and devise a best budgeting strategy and as mentioned before, it is always good to have a realistic budgeting strategy than a fantasy one.
- Track spending and development through Saving apps
Keeping track of your budget is important, as things can change at a click of a button, and you may need to adjust your budget if anything changes, such as your income or expenses. Intellisaving is a smart saving account application that allows you to track and manage your saving accounts within one platform. It is also a best platform for finance management as savers are in the driving seat to control their saving and interest accounts strategically, compare best rates in the market, view a detailed summary of their accounts, and add products of interest to the watchlist. All these features help you to be more effective while doing your budgeting, find out more about how Intellisaving can help you with saving tips and tricks. It’s one of the best applications in market for tracking your saving that you have been waiting for.
Budgeting can seem intimidating as there are different recommendations to follow for a successful budgeting plan, and that often requires sacrificing the wants of now for the desires of the future. However, the effort is worthwhile when progress is made and saving goals are met. Budgeting has a range of benefits, as mentioned previously, making it a valuable investment of time as it increases the ability to save and brings you one step closer to achieving the dreams of tomorrow.