Okay, all this talk about a budget. You know what a budget is and why you should have one, but how to budget effectively?
In the beginning, a good idea is to keep track of everything you spend money on for 1 month. You can set it up in a notebook with three columns, one for the description of what you bought, the second for your income, and the third for what you spend.
On this form, you must record everything. Even if you just spend a dollar on a soda, record it because in the end, both sides need to balance out. This is a good habit to keep up all the time, but it isn’t necessary.
Next, you need to examine what you’ve bought. Sort through it and decide which expenses are fixed expenses, or expenses that are for the same amount every month. These types of expenses are most often bills like cell phone bill, insurance, etc.
How to budget effectively requires you to list all these expenses. Write down next to them the amount to be spent.
Then look at the things you spent money on that were changing, such as snacks, movie tickets, gas, and gifts. Gas should be made one section. Take how much you spend in one week and multiply it by 4, for one month. If you spend $20 a week, put aside $80 a month for gas.
I have a certain amount of money set aside each month for gifts, whether I have any gifts to buy that month or not. It’s a really good idea. All you have to do is calculate about how much you will spend in a year on gifts and divide it by 12. This will come in really handy at Christmas time. If you have to pay for your own clothes or personal hygiene products, it may be a good idea to do the same with these necessities.
Now, for the remaining categories, you need to use your own discretion. Use a Budget Calculator to Calculate how much you spent on everything else which should include food, the movies, mini golf, books, clothes, and just about anything you chose to spend for fun or your own amusement. Does it seem like an outrageous number?Did you spend $300 dollars in one month on this stuff? I can tell you, as a teenager that is outrageous.
Depending on how old you are, you should make this expense anywhere between $20 and $100.Although, I think $100 is even a little steep. Set this amount aside every month and stick to it. You may even find yourself saving some of it for more exciting months. If you put aside $50 a month and you only spend $35, by the end of the year you’ll have an extra $180 that you can spend on something big to treat yourself.
Knowing how to budget effectively will lead to improving your financial situation
Every month, you should spend your first paychecks on important bills. Set up a little file system and put aside each expense in a slot. Look at all your expenses as a bill including fun money and gifts. Let’s say you get paid weekly and your expenses add up to $200. If your paychecks are for $100, you can set aside all your expense money in the first two weeks and then the checks for the rest of the month can go right to savings.
After you pay for each expense for the month, cross them out so that you know that they have been paid. You don’t want to pay any bill more than once.
Now that you know how to budget your money, learn how to budget your time, and you’ll be on your way to feeling rich!