Building a Budget, Brick by Brick

Building a Budget, Brick by Brick

Too many of us either do not have a proper budget, or do not stick to the one we have planned. The importance of a budget not only helps us to regulate and keep track of our spending, it also helps us to save better and smarter. When we keep track of our money, we are able to make smarter investments and to save our funds smarter.

While building a budget may seem daunting, taking on your monthly or annual budget slowly, step by step, will help simplify the process and help you ease into a saving routine. This especially comes in handy for those who own their own business or are starting one.

Research

While this may seem tedious, looking at your past three to five years of average spending will help provide you with a base-line of where to start when planning your budget. Look into credit card and debit card statements, cumulate a list of averaged monthly or annual bill payments, as well as averaged monthly or annual money spent on food, other necessities, and leisure activities. Take your annual income after taxes and subtract your summed annual spending to outline your current spending habits and see where you wish to make any budget cuts and where, or simply to have an idea of how much you are roughly saving each year.

50/30/20

The 50/30/20 rule is a general outline for anyone creating or updating their budget. While not the only way to balance your budget, it is a great place to start. After calculating your income after tax, when building your budget, set aside fifty percent of your income after tax to put towards you necessities and needs. Everything from food to car insurance to rent or a mortgage goes into this fifty percent. After that, allocate thirty percent of your income after tax for any wants or desires. Vacations, dinners, and outings will fall under this category. Your final twenty percent is then set aside for savings and paying off any debt you might have. Having these percentage restrictions provide you with a goal that gives you something to hold yourself accountable to.

Get Rid of Debt

According to the United States’ census, the average household in the United States holds over $137,000.00 in debt. Keeping to a budget not only helps you dig yourself out of debt quicker, it also helps you to monitor your debt. Many of us spend years paying back school loans, other loans we may have needed in a pinch for car repair or other unpredictable accident, and of course there is always the necessary evil of credit cards. Breaking out on your own and starting a business is becoming more and more common, but most of us do not have the capital to start a business from scratch and often resort to loans. This debt can quickly build up and get out of hand when we push it out of mind, but the trick is to be proactive. Read this article to learn how to take out a loan smarter and cut down on your debt.

Written by Jen Brenner

About tikichris

Chris Osburn is the founder, administrator and editor of tikichris. In addition to blogging, he works as a freelance journalist, photographer, consultant and curator.
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