“Congratulations! Welcome to the real world.” has been the greeting to you when you got your first job. Now that you have been receiving paychecks, have you experienced spending them like a millionaire on the first week and then living like a beggar the rest of the month? Don’t worry it’s just part of the initiation for new workers. Prevent it from happening again with these budgeting tips!
Budgeting Tips: Why Manage Your Personal Finance
You may ask yourself, “Why do I need to budget my salary? There will come another payday!” Aside from surviving the dreaded petsa de peligro, the following reasons should define how to manage your personal finance.
Working is different from studying. Gone are the days when you can ask for allowance from your parents. You must pay for your own now; or sometimes you also need to help in the family expenses.
Save your hard-earned money. Think of it as paying yourself and not letting the money slide through your hands into another.
Admit it, the fun side of work includes you buying the things you want—not need. While it’s not advisable to blow your budget, young millennials today may divide their salary for their lifestyle needs.
If you think it’s too soon, think again. Do you envision yourself in your old age still working like a carabao, or do you imagine yourself relaxing by the beach, in an exotic place? If you choose the latter, you must invest now. Investment options are plenty and accessible, but you need to educate yourself which fits you.
Sound Financial Image
Are you unfamiliar with the term? It means building yourself as someone trustworthy, should the time come you need to apply for credit cards or loans.
Guide to Budgeting: What to Include in Your Budget
With these reasons, you can now decide how to tailor your budget. However, what should you include in the budget, you ask? Here are the main components of your budget.
What do you value most? Check your lifestyle if where do you spend most of your salary. Do you have debts you need to pay? One of the most basic budgeting tips is to rank where you need your money to go first.
What do you want to achieve? As you decide your reasons to budget, you will motivate yourself to reach your set goal.
How much do you make? One financial advice for young professionals you must follow is to live within your means. Just remember, if you can’t pay for it in cash, you can’t afford it.
Where do you spend the most? Find out where your money goes. You might surprise yourself how much you spend on expensive food and drinks. One of the budgeting tips you need is to list your expenses in order from negotiable to non-negotiable.
Can you still remember your goals? We’re dealing with your future here. Use this part of your salary to reach them whether you plan to retire early or buy your future dream house. A useful budgeting tip you could try is to open separate bank accounts to avoid unexpected spending.
Why do you need an emergency fund, you ask? Considered among the wise financial decisions you should make, allot this for unexpected situations, such as medication. An ideal emergency fund should worth six months of your salary.
Assign these funds for your whims. However, traditional budgeting considers this part as an expense. If you’re looking for budgeting tips for young adults, dedicate a part of your fund to feed your lifestyle. Fuel your travel bucket list here. Buy your dream gadget from your flexible fund. This way, you don’t view budgeting as a bane to your existence, but the grease for your wheels
Money Saving Tips: How to Expand Your Budget
By now you’re enlightened why should you budget and what to include in your budget. However, the golden question remains, how will you build your budget? Is there a process involved? Choose from the strategies you can change into your abilities.
Budgeting Tip #1: 50-30-20 Rule
If you want the basic budgeting guideline, try the 50-30-20 rule. With this, 50 percent of your salary goes to necessity such as food, transportation, housing, and your bills. Allot 30 percent for your wants. This includes your clothes, dining, and entertainment. The remaining 20 percent should be for your savings.
Budgeting Tip #2: Conscious Spending Plan
New York Times bestseller author Ramit Seth offers a modern take on the basic budgeting rule. Instead of three parts, divide your budget into four aspects: fixed costs (50%), investments (10%), savings (5-10%) and guilt-free spending (20-35%). This strategy does not follow a rigid division as with the earlier one. Rather, it allows you to adjust to your preference.
Budgeting Tip #3: Bill Schultheis’ Method
Author of the book, The Coffeehouse Investor, discusses how you not just save your salary, but also grow your money. This strategy encourages young millenials to invest right away, stating the advantage of creating a head start among your peers who might engage in stock market or mutual funds later in life.
Budgeting Tip #4: The Envelope Method
Author of FAFSA Made Easy: Getting the Most Out of College Financial Aid, Arthur Isabella suggests using the Envelope Method. No matter which of the earlier three you use, set your funds aside in envelopes, labeled each with the purpose. Offer space for you to jot down how much you took. Calculate how much is remaining, as well. This way, you can track your spending.
Sources: fortune.com| businessnews.com.ph| moneygirlphilippines.com| thinkpesos.com| grit.ph| policygenius.com| aviva.com.sg| monster.com| moneycrashers.com| raymondjames.com| i-millenial.com| lifehacker.com| twocents.lifehacker.com
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