There are a TON of information online about budgeting. So this article will not attempt to reinvent the wheel in anyway.
The ONLY purpose of this article is to remind you the importance of budgeting and being aware of your financial health. NO attempts here to promote any product or idea, but would like to engage you to think about this for yourself.
Its never to late to stop and take a good look at your financial health. Surprisingly this can be indicative of your personal health and habits which need improvement as well.
Do you know how your pay check is used?
Are you aware of your total pay, and how much every month is deducted from your pay check for taxes and such before you get what’s left?
Do you have a systematic plan of saving and investing?
Are you comfortable with where you are financially?
If any of the questions above makes you even slightly uncomfortable, GOOD! Thats a sign that, deep inside you, you know you have some work to do and change is coming.
One simple guideline is to first start a monthly budget.
Its easy, use a google doc or a notepad and get started.
A. Calculate your total income for the month
B. Write down your essential expenses (Rent/mortgage, utilities, food, phone bill, gas), then sum it up
C. Write down how much you put aside for savings and investments every month (savings, stock/ETF/Mutual funds); sum it up
D. Write down how much you use for discretionary spending like entertainment, shopping; sum it up
The 60/20/20 budget is a a good guideline to design your budget around. This is not written in stone, and you can make it flexible to suit yourself but generally a good place to start
60% of your income – basic living expenses, essentials
20% of your income – savings and investments
20% of your income – discretionary spending
Basic/essential Expenses : B/A x 100 = % of essential expenses
Savings and Investments : C/A x 100 = % of savings and investments
Discretionary Spending : D/A x 100 = % of discretionary expenses
Taking this step, will be worth it and you will thank yourself in the long run. Do this at least once or twice an year and ensure you are on track.
Ofcourse if possible, save and invest more than 20%!
You will find out that, financial success is a journey. You have to overcome your physical and mental habits which may be holding you back.
You will gain more of an awareness of your own self along this journey.
Wish you happy travels!
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