5 steps to creating a budget that works

Many people think that keeping a budget is a difficult and unpleasant task. But this is not so. Here are five easy tips from Business Insider to turn cost planning into a good habit.

  • Share wishes and needs

You have needs – housing, wholesome food, travel, clothing. It is necessary to spend money on them. And there are desires – fast food, sweets, coffee with you, alcohol, cigarettes. If you separate them from needs, you will save a lot.

This does not mean that spending on desires should be excluded. Get them a separate column in the budget. When you see how much money this month will go into bad habits, you will probably want to get involved less often. Put the saved money on a deposit or card with a percentage on the balance.

  • Include the miscellaneous category in the expense

It is impossible to predict every waste that you encounter during the month and even more so the year. An unexpected car repair or illness can harm the budget. Enter the miscellaneous category in the planned expenses and save some of the money in case of unforeseen situations.

  • Record your savings in expenses

Select the amount that you will save from each income. Try to replenish the piggy bank immediately, even before you pay bills, loans and other expenses.

If you include the category “Savings” in the column of expenses in the budget, most likely you will treat them more responsibly. The most effective option is to set up an automatic transfer of the amount or percentage from each receipt of money to a bank account.

  • Relate budget to life goals

Personal finance consultants are convinced: it is very important to build a budget in accordance with your goals and values. For example, someone dreams of a good car, and someone is ready to use public transport, but at the same time intends to buy an apartment. If you know what you want in life, this will help you decide on long-term expenses and start saving on them.

Do not forget about the family budget. It should be consistent with the goals and values ​​of each member of the family.

  • Keep receipts and receipts

Not necessarily in paper form. They can be photographed, saved in an Excel file or in a mobile application. Bank statements and expense reports in bank applications are also useful. Accurate spending information will help you more accurately predict costs when budgeting.

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