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6 Tips To Create A Great Budget Plan For 2022.

A guide to help you feel more comfortable with your personal finances.

Why is having a budget plan for yourself important?

A budget plan provides you with the opportunity to assess your current spending, determine how best to allocate your income and to ensure that you are able to save money and also enjoy life. Worrying about the state of your finances can be really stressful and it can have negative impacts on your lifestyle and mental health by limiting what you are able to do. Having a budget plan will help you spend within your means and put some money aside for when times get hard. It will also help identify areas in which you can cut back in order to free up funds for savings or bill payments. Universities in Missouri are now starting to help young adults learn how to budget and are emphasizing on the importance of budgeting.

Creating a budget plan can be a daunting task, but it is necessary to have one in order to keep your spending in check. Here are some tips to help you get started:

  1. To begin it is important to figure out your monthly income and expenses. How much money do you think you’ll make on a monthly basis?. Include any additional earnings, such as child support or social security benefits, if applicable. Record this sum of money as a monthly figure.

Then include all of your fixed monthly expenses, for example: 

  • Rent or mortgage
  • Car payments
  • Groceries
  • Bill payments
  • Gas
  • Pet supplies
  • Medical expenses
  1. Create a list of priorities. What are the most important things to you? Make sure that your budget reflects your priorities.
  2. Be realistic about your spending habits. If you know that you tend to overspend on certain items, be sure to account for that in your budget. A budget only works when you are completely honest and transparent about your finances. 
  3. Make a plan for short-term and long-term goals. If you want to buy a new car in 5 years, start saving now. If you want to be out of debt by next year, look for ways to cut back on spending.
  4. Make adjustments as time goes on. It’s important that your budget plan is flexible enough to accommodate any changes in circumstances (raising kids, getting married, taking on more debt).
  5. Stick to it! Although this can sometimes be difficult, especially if income or expenses change drastically, knowing how much money you have is the only way you’ll know how much you can spend. 

If you are finding yourself in a situation where you are spending more than you are earning, it can be daunting but don’t worry making adjustments such as eliminating a category of expense (The gym membership you are paying for but not using!) can help cut back costs. If you find that a portion of your paycheck is going towards one specific category of leisure, making small changes there will also have a positive effect on your monthly spending.

How To Utilize Your Budget

Once you’ve created your budget, you must keep an eye on and update your costs in each category on a regular basis, ideally every day. You may also use the same budgeting spreadsheet or app to keep track of both your expenses and income totals. Keeping an eye on your spending habits throughout the month will help you avoid overspending and will also show you problematic spending habits that you can tweak or eliminate. Take a few minutes each day to keep track of your expenses, rather than waiting until the end of the month. You should also monitor your line of credit as well.

Sometimes you may feel frustrated but don’t be too hard on yourself. Circumstances change, our priorities can shift, we move, our family status can change etc. Take some time every few months to sit down and review/tweak your budget so that it can fit in with your life’s changes.