When you live paycheck to paycheck, crafting a budget plan is a scary task. Many people avoid looking at their bank account, so they don’t have to think about how much they’ve spent. But this can lead to some nasty surprises at the end of the month.
Creating a budget plan will give you more freedom, more security, and more confidence financially. Check out the following five tips for becoming a successful paycheck budget planner.
1. Track Your Spending
The first thing you need to do is to become familiar with your spending habits. Open up your credit card statements for last month and go through them line by line, creating totals for different categories.
How much did you spend eating out last month? What percentage of your paycheck goes to transportation?
Combing through your credit card statements like this is eye-opening. People often find that they spend more money on certain things than they thought they did. This is why this step is essential for a paycheck to paycheck budget.
Ideally, 50 percent of your paycheck should go towards necessary spending. Thirty percent should be designated “fun money,” and 20 percent should be put into savings.
Once you have your totals, you can move on to the next step.
2. Consider Your Options
If you just determined that you spend more than you earn, you have a couple of options.
You can get a side job to raise your income level. This means you can carry on without adjusting your expenses.
Or, you could cut back on your expenses to accommodate your current income.
If you make enough money to cover your bills but don’t have regularly scheduled paydays, you can also see if you qualify for an online payday loan. These short-term loans can help you cover your expenses until you get paid. More info from Captaincash.ca.
3. Determine Your Necessary Expenses
There are some things you just can’t live without. And no, we aren’t talking about Netflix.
Use a blank calendar page to pencil in all of your expenses that aren’t going away. This will be your paycheck budget template. Necessary expenses include things like rent, your phone bill, and groceries.
Assign each of those things to a day (or multiple days) per month. This will help you visualize how much money you need to earn, and what times of the month incur the most expenses.
4. Consider the Extras
Now it’s time to look at the “unnecessary” expenses you need to budget for. See if there are unnecessary expenses you can cut down on in this category.
But be realistic about these cutbacks so that you can succeed in meeting your budget goals. For example, if you spent $200 on clothing last month, don’t erase this category from your budget entirely. If you do, you are likely to fail.
Instead, budget $75 dollars for clothes. This is a more realistic budgeting choice.
5. Save for a Rainy Day
Optimally, you should put 20 percent of your paycheck into savings. You can plan most of your budget to the dollar, but unplanned expenses often come up. You want to have some rainy day funds to take care of those costs.
As you go, you might find that you need to adjust your budget plan. Change your budget as necessary to make sure it accommodates your needs.
Now You’re a Paycheck Budget Planner
If you follow these five tips, you’ll soon be a successful paycheck budget planner. Budgeting your paychecks will give you financial freedom and security for the future.
Want more budgeting advice? Check out our Finance section for some tips.