5 Practical Budgeting Tips

July 28, 2020

5 Practical Budgeting Tips

What are some practical budgeting tips that you should know?

  1. Have a goal in mind
  2. Budget with someone
  3. Anticipate monthly expenses
  4. Set up an emergency fund
  5. Pay off your debts

Every person understands the importance of setting aside enough money to keep them surviving. Especially during this pandemic, having adequate financial resources can already greatly help in enabling yourself to meet the necessities. However, it’s always easier said than done. Temptations run about and people just can’t help spending their money. Fortunately, these practical budgeting tips are sure to keep you on the right track. Continue reading to learn more.

Have a goal in mind

Before you even go through the motions of budgeting, it’s important that you have a goal in mind. You can start by setting short-term financial goals that may range from a few hundred pesos to thousands.

For example, set a goal of how much money you should have by the end of the week. Draft up a master list that contains information regarding your top sources of income. List down all of your expenses and then provide an estimate on how much you spend on each of them. This helps give you a good idea of how much you’ll end up after a week, or so.

Budget with someone

Budget with someone

If you find yourself in a financial rut, it’s always a good idea to have an extra pair of hands. Whether it be your partner or a friend, it’s a good idea to conduct your budgeting with someone that you can fully trust.

Having someone by your side can already serve as a motivation for you if you’re having difficulty budgeting alone. They can serve as a reminder for you to save up that Php 1,000 bill that you’re planning to spend on something that’s not practical. Allow that person to help you with your budgeting journey. In turn, you could also offer them tips — after all, struggling together is always better than the alternative.

Anticipate monthly expenses

Not every month is going to be the same. There will be months when you might end up spending a lot more than what you’re used to. Anticipating where your money will go is important in effective budgeting.

For example, if you’re planning on installing an air conditioning unit in your room, then be prepared for your monthly electricity bills to skyrocket. If you have insurance premiums, then it’s best to prepare for them as well.

Alternatively, you might also end up diminishing your expenses, now that you’re working from home. You’re no longer setting aside money for transportation, gas, and the like — it ultimately depends on the situation you’re in.

Set up an emergency fund

Set up an emergency fund

Before you set up an emergency fund, you may want to open up another savings account that’s separate from your main one. The second account is where you’ll deposit the money that you allocate for emergency and crucial situations that might happen to you, or your family members.

It can be time-consuming to have to physically visit the bank just to simply deposit money into your emergency savings account. Fortunately, banks offer automated transfer services that will transfer a specific amount of money at certain dates. This is also a great way for you to consistently stick to a rigid amount of money that’s designated for the emergency account.

Pay off your debts

Not paying your debts can derail you from effectively allocating your money. This may be the perfect time for you to start getting in touch with people whom you owe money to. If you own a credit card, always ensure that you pay your expenses on time to avoid getting into financial trouble.

There’s nothing quite like the sense of peace that you can derive from being financially worry-free regarding your debts. You’re able to go about your days without this nagging voice at the back of your mind telling you to feel guilty about spending your next paycheck on a gaming console, or a new smartphone. Always make this one of your financial priorities.

Key Takeaway

Budgeting may seem overwhelming in the beginning, but with the right practical budgeting tips, you can easily be on your way.

You don’t have to start with complicated practices that can make the task too overwhelming for you. It can be as simple as setting a financial goal, to something more ambitious, like paying off all your debts or creating an emergency savings account. As long as you keep all the tips above in mind and religiously stick to them, you’ll easily get the hang of it.