![]() ![]() ![]() Chances are most of your fixed expenses will fall into the “Needs” category, but a few flexible ones like groceries and electricity are Needs too. Take another look at your fixed and flexible expenses. It goes like this: 50% of your monthly earnings goes to necessary expenses or needs, 30% goes to the good stuff aka wants, and the remaining 20% goes to savings. There are multiple budget styles out there and we could wax lyrical about the pros and cons of each, but instead, we recommend the 50/30/20 rule or the KISS principle. You’re nearly there, kudos! With your expenses listed out you’ve got a clear view of where your money is going each month. Flexible savings can include water, electricity, groceries, drinks at the bar, dining out and so on. Rent is generally fixed as is monthly insurance, car repayments and credit card payment instalments. Fixed expenses remain the same every month and flexible expenses will dip and drop each month. With all your expenses out in the open, you can categorise them based on whether they’re fixed or flexible expenses. The more you go down the rabbit hole, the more comprehensive and useful your budget will be. Take the time to list everything – rent, rates, water, groceries, entertainment, credit card debt, the works. We’ve all got little spending skeletons in our closet we’d rather not face, but this only works if you’re 100% honest with yourself. Now’s the time to get serious about everything you spend your money on per month, no matter how embarrassing it might get. Step 2 – Lay it all out on the table (your expenses, that is) As Will Ferell so aptly put it “So many activities!” The best part? All the months where you earn more will give you more wiggle room for redistributing that sweet, sweet surplus however you like. Basing your budget around this ensures you cover all your necessary expenses even in the worst-case scenario. If your monthly income varies month to month, take a look at your monthly earnings over the past year as a reference and use the amount where you earned the least. If you freelance or work as an independent contractor then you’ll need to use your gross income amount because you’ll need to pay your provisional tax. If you’re a PAYE employee, then use your net income amount after your tax has been deducted. The first step you need to take is to figure out how much income you’re working with every month. Put in a bit of work now and the dividends will pay off later, we promise. Seeing how much you spend every month on everything staring you plain in the face can push you to be more budget-conscious throughout the month.Įven if you go for an app, sitting down and actively engaging with your money habits at least once can offer valuable insight into your lifestyle as a whole. It can be the kind of shock therapy you need to kickstart the process of changing. ![]() We’re all about making life easier with tech and if you want to get an app, go for it! But it pays (literally and figuratively) to actively take a good look at your spending habits, beyond inputting numbers and occasionally checking updates in an app. Why should I create a budget when there’s already an app for it, or 12? Fair question. The No-Nonsense Guide To Creating a Budget That Works Here’s our beginner-friendly, no-nonsense guide to budgeting. But we can help you get the cogs turning towards a better financial future. Will it change your life? We can’t make any promises, that’ll be up to you. If you’re looking for where to start with your budget, you’ve come to the right place. What’s the best type of budget to follow and am I doing it right? We hear you. If you’re new to budgeting, it can be kind of overwhelming. Knowing exactly where your money is going gives you more autonomy and empowers you to take charge of your life and your future. But it’s necessary and, if you do it right, can change your life in the best way. It’s not very fun, no matter how old you are. Let’s face it, there are many things we’d rather be doing in our spare time instead of budgeting.
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