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How to Get Started on a Monthly Budget

13 December 2018 No Comment

You’ve been standing in line at the grocery store for ten minutes with your shopping cart filled to the brim with boxes of frozen food, bags of produce and assorted items. You finally make it to the register and wait for the cashier to scan your purchases and tuck them into plastic bags. They tally up your total and you go to pay with your credit card, but when you swipe it, you hear an awful sound. You look down at the payment terminal and see that your card’s payment is denied — you’ve reached your credit limit.

If that uncomfortable scenario is familiar to you, you should think about starting a monthly budget. The financial plan prevents you from getting carried away with your money and living on the edge until the next paycheck comes in. Anyone who is unsure where to start with a personal budget can follow these three basic steps:

Step 1: Take A Hard Look At Your Finances

You can’t make a reliable budget if you’re unsure about how much money you are getting and how much you need to spend. Check to see what your weekly or bi-weekly paychecks bring you in the span of a month. Anyone that has additional forms of income like an online business, craft-selling or freelancing, should include their average gains when they create a budget — be sure to calculate taxes and other important deductions before putting them in the final tally.

Step 2: Divide It Up Into Categories

Once you’ve figured out your typical monthly income, you need to divide it into manageable categories. Experts recommend that people trying their hand at budgeting start with the 50-20-30 rule — this means that fifty percent of the total income goes to essentials like rent, twenty percent goes to savings and the final thirty is open-ended spending for hobbies and entertainment.

Use the rule as a general guideline to figure out what works best for your situation. If you live in an expensive city, you might want to reduce the percentage for open-ended spending to bulk up the funds for rent and utilities. If you frequently deal with money troubles, you might want to make the savings portion larger than twenty percent.

Step 3: Set Yourself Up For Success

You won’t be able to stick to a budget if you set yourself up for failure from the get-go — making your financial limits too hard to follow will only lead to disappointment and more spending. For example, when you have a budget that restricts you from going to the movies once a month, you’ll resent it and break the rules.

However, you should never try to live beyond your means. Convincing yourself that you need to go out to restaurants, hit up trendy bars or buy new clothes every week is going to drain your account. Ultimately, you should try to strike a balance between confining and lenient spending limits so that your budget is manageable and realistic.

Why Is This important?

Right now, studies show that most adults are living paycheck to paycheck and are struggling to make ends meet — the survey by CareerBuilder reports that this happens to approximately eight out of ten workers. People are in this troubling situation because wages have been stagnant while the cost of living keeps rising. Unfortunately, this means that the average adult is not prepared for any hiccup.

Building a monthly budget helps you put enough savings away so that you can handle the stress of an emergency expense. People who haven’t created their budget yet and are in the midst of a rough patch can go to online lender like MoneyKey to get an installment loan to pull them out of it fast. Whether it’s an overdue bill or a stalling car, you can use a loan to get back on your feet. The speedy application process means that you can get the money that you need after a single business day.

Anyone who is wondering how to borrow money quickly from an online lender can find answers to their questions on the official website or they can call a representative to speak to someone in-person. In the future, the accumulation of savings from your budget will be able to take care of a situation like this.

The first few months of budgeting will be the most difficult to get through. It will take time to adjust to your set boundaries and modify them so that they work with your everyday life. The spending and saving habits will eventually become part of your routine so that you follow them without even thinking. By the end of a year, you will be pleasantly surprised by the savings you will have stored away.

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