Sorting out your finances may be stressful at times. But unfortunately, it’s an essential part of adult life.
If you’re fresh out of uni and stepping into the real world, this is may be the first time you’ve had to budget.
It does mean that you have to start a budget plan. You need to log all expenditures and learn to budget for them so you don’t go overboard.
Read on for four simple tips for making your first budget successful.
Four Simple Tips for Making Your First Budget
Managing your first budget may be scary, but don’t worry. We’re here to help you make your new budget and get your finances off to a great start.
1. Figure Out Your Monthly Income
It’s exciting to start making real money out of college, but you need to manage it well.
Figure out how much money you earn each month. Take a look at your last paycheck to find out. If you’re self-employed, add together your net earnings from the last year and divide it by 12 for each month.
Add any irregular payments such as commissions or bonuses too. Work out the monthly average if they’re paid quarterly or yearly.
2. Work Out Monthly Expenses
Rent, utilities, loan repayments, groceries, gas: you need to work them out.
Divide the annual bill of all these expenses by 12 to get your monthly average. from your monthly income, determine how much needs to be set aside. A spending tracker app will help you do this.
This will help you figure out a budget plan that works. It’s important to remember that these are necessary expenses, so they come first.
3. Set Budget Goals You Can Stick To
When you set your first budget you may feel very disciplined to stick to it at first. But, this will wane within a month or two, so you have to make goals that are realistic. There are a lot of great tips to help keep you on budget.
In the short term, you don’t have to cut out everything you like. If you love regular social events with friends, don’t cut it out altogether. Instead, arrange dinner at your house and make a cheap but tasty meal or have a movie night, that’s free!
It’s unlikely you’ll be able to buy a house within a year of budgeting. Set short-term, mid-term and long-term goals. Stuff like vacations goes in the short term. Weddings go into mid-term, and retirement goes into long-term.
4. Get a Savings Account
Figuring out your long-term financial goals is essential for a good budget. If you’re looking to buy a house or have retirement savings, you’ve got to put money aside. A savings account is the best way to do this.
One of the best rules is to always save 10% of your salary. Use the 90% remaining to pay for all expenses and don’t ever touch that 10%.
Also, make sure you have enough money in case of an emergency. This includes any sudden case of unemployment. In this case, you need to have enough saved to get by for 3 – 6 months.
Make Your First Budget Successful
Budgeting your money is very important. Not only does it allow you to survive and pay the bills, but it allows you to save for the future.
It may be hard at first, but if you make your first budget realistic, it’ll become second nature. Plus, it feels great to know you are safeguarding your future.re.
Looking for more financial advice to help get started? Check out our blog for more information.