They say that money saved is money earned. Hence most of us try to save every penny as we can. But sometimes we end up spending more than the money that we have. There could be various reasons behind that. One of the core reasons is impulsive shopping. We tend to go for unplanned shopping most of the time, which causes us to spend a lot of money, and we are left with 0 amount at the end of the month. Here is a solution most of the finance gurus recommend creating a budget and spend the money according to it. There are various articles available on the internet that can help you start with the process of budgeting and get overwhelmed with it. Hence, here we have come up with some of the easiest ways to help you create your budget effectively.
Use Credit Card
You would be wondering why we suggest using the credit card here when the whole world is against it when it comes to managing finance. But there is a reason. You tend to lose the tracking when you spend count. You may forget to note it down after spending. But if you use a credit card, then you can check your spending in a statement. This way you will come to know about your spending easily. You can also use a debit card if you do not have a credit card with you. Some of these cards also offer additional rewards on spending a certain amount which would be a bonus for you. There are several websites, such as https://deferit.com/, that help you to pay bills and earn rewards.
Set your goal
The first step in creating the budget is to set the goal. You would not be able to save money unless you have a goal in your mind. It would help you to give a clear picture of what you are saving for. Setting a goal will also inspire you to work towards your savings easily. Setting a goal will also help you to control your spending so that you can spend less on unnecessary things and save more towards your goal. The goal could be anything. You can either set a goal to buy a home, build an emergency fund, or buy a car.
Track your spending for the week
Tracking your spending will always give you a clear picture of where you stand in the process of your goal. You can either use the digital apps or a traditional pen-paper method to note down your expenses. Nowadays, there are various apps available that help to note down and track expenses easily. You can easily link these apps to your bank account, wherein the app will keep a record of every penny that gets deducted from your account. Here you will be able to see the amount along with the purpose it was spent for.
Make use of 3 category budget
There are various things for which you won’t be able to control your expenses such as petrol or medical expenses. But you can certainly take control of fewer categories such as food, clothing, entertainment, etc. You can choose any three categories and create a budget accordingly. You can start monitoring the spending in these categories. This 3-category budget is known to be easy to implement and can show a significant effect on your finances.
Pay yourself first
The golden rule of saving money and creating the budget is to pay yourself first. Here we are talking about saving some amount of money before you start utilizing it for the expenses. Make sure to take out your savings on the very first day as soon as you get the money in your hand. Now you can either choose to keep it into the savings account or move to the other investment options for better returns.
Use the 50-30-20 plan
With the 50-30-20 plan, you will be able to distribute your income easily and create an effective budget. According to this rule, one should spend 50 percent of the income on necessities, 20% on savings, and 30% on lifestyle choices. If you are struggling to decide how much to spend and save, then this rule would be a savior for you.
Take the help of the right tools
Using the right tools will help you to ease the budgeting process. There are several tools that can be useful to track your expenses and help to create the right budget plan. These tools are generally linked to your bank account. Hence it becomes easier to track your spending.