Money. Plenty call it the root of all evil, others wish to have more, and some struggle to earn it. However, we cannot deny that it plays a significant role in letting us live comfortably and afford the things we both need and want.
For the most part, we’ve all got our jobs, freelance work, and maybe even small-time business operations to depend on as livelihood. This is what allows us to purchase our basic needs and even pay for that Netflix subscription.
There is just one major problem, regardless of how much we earn, we always struggle to make ends meet. Even for those who’ve landed a promotion in work, they still find themselves stuck in the perpetual loop of not having enough.
So, what gives? Are we all just cursed to be trapped in this rat race? Or is there something in particular that we’re missing out on?
The straightforward answer is—an effective budget plan.
Simple as that may sound, some households operate without one. And for those that do, they can’t seem to manage their finances as their budget entails. And especially with the current global situation, we must emphasize the necessity of having a budget.
Source of Our Money Problems
Often, the majority of people are so obsessed and fixated on the idea of earning more money, that they completely glance over the real reason they suffer financially. Believe it or not, a lot of us are making more than enough to meet our needs; it is our inflated lifestyle that’s hurting our wallets the most.
Once we start taking home more pay, this puts our minds in a trance, one wherein we daydream of all the new luxuries we can afford. And while there is nothing wrong with getting a new car or rewarding yourself with new clothes. Ask yourself, do you need them right now? Are there more important matters you need to concern yourself with first?
Practice the 50/30/20 Rule
A great way to best manage your finances and land yourself a practical budget plan is by practicing the 50/30/20 Rule. This way of budgeting states that you divide your take-home pay or income after tax into three main categories, namely: needs (50%), wants (30%), and savings (20%).
- Needs: You need to eat, pay the bills, and of course, have a roof over your head. These are but the bare necessities you need to survive, which is why they should make the most considerable portion of your budget plan. Don’t also forget to include any of your obligations; paying off your debt is also a priority. However, don’t go over 50%, if that happens, then you may want to reconsider the expenses or earn more.
- Wants: Yes, installing a new garage door is an excellent way to increase property value and make your house look nicer. However, as with all of our wants, make sure not to exceed over 30% of your budget. This will help limit down your choices to things you genuinely enjoy.
- Savings: Last but not least, you will want to have savings left over. The remaining 20% of your budget should be set aside for any future endeavors. Likewise, this will also function as your emergency fund if anything bad were to happen.
Use a Budget Planning Application
While pen and paper can do the job just fine, there exist plenty of digital alternatives that you should use for budget planning. This will make tracking expenses much easier and encourage you to follow-through with your budget as opposed to traditional methods.
- Excel Spreadsheets/ Google Sheets: If you want full control over how your budget looks, then a simple way to get started with your budget plan is by using Excel Spreadsheets or Google Sheets. You can download formats online or maybe dabble in with your style. Plus, its functionality is perfect for the budget plan.
- Mint: If you’re looking for an all-in-one budget planning app with a seamless design and easy to use interface, then you might want to try Mint. Brought to you by Intuit, this app is a great choice to manage your personal finances, and it even offers unlimited credit scores. Plus, it’s free.
Reflect and Take Action
At the end of the day, if you want to make your budget work, then you must first reflect on what you’re doing wrong. Find out what areas of your life are you overspending on, identify things that you don’t need, and see what expenses you can cut. From there, all you need to do is take the first step.