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How to Create a Successful Personal Budget Plan

personal budget plan

With any plan that involves getting your life together and starting a new chapter, amongst gym subscriptions and committing to drinking more water, a personal budget is always a must. 

There are, however, personal budgets that never really amount to changing much in one’s life. And then there are successful budgets that people spend time creating, and in turn, a financial forecast is formed to improve their lives now and in the future. Whether applying for debt consolidation loans for bad credit to simplify and reduce debt repayments, or creating a standing order to transfer money to an emergency savings account on payday. A personal budget can help you to relieve money worries and manage your money more effectively.

Usually, a successful budget is recorded on a device be it an app such as Monefy or Quicken or software such as Microsoft Office or Google Sheets. Creating any old personal budget on a scrap of paper never holds much gumph. However, creating a successful personal budget means allocating money to chip away debt and gradually build your wealth. 

Income

Your income includes everything from your take-home pay, to your side hustle selling up-cycled furniture. Interest from your savings accounts, state benefits, and any support money from your family. Everything that enters your account(s) should be added to your chosen spreadsheet, or app to give you an accurate picture of your earnings. Also, if you’re sharing a home/family with your partner, add their wage to your budget too.

Outgoings

Rent/Mortgage, gas, water, electric, phone bill and food - these are the payments you have no choice but to make to ensure your survival and most of these are usually fixed for a set term. You need a roof over your head, heating, and water, and so these bills should be prioritized in your budget first. However, this doesn’t mean there isn’t room to bring your outgoings down or change them. You can, of course, make cuts, for example, by being meticulous about the heating and electric you use with the help of Professional Heating & Cooling’s Service Areas.

Haggling to reduce your bills is also a method worth trying. For instance, when your contract is due to end with your utility provider don’t be afraid to call other companies for better rates and ask if your current provider will match the costs you’ve found for the same service elsewhere. Part of creating your personal budget is figuring out where you can make savings so that you can spend your money on improving other areas of your life. Once you’ve haggled down your bills, add each one to your spreadsheet and minus it from your income.

Debt Repayments and Savings

Every successful personal budget’s purpose is to manage an individual’s money well enough to allow them to live well in the present but to also set up a plan to carve their financial future. Debt repayments and savings should arguably take precedence over your spending money. As the quicker you pay down your debts, the more income you shall have free per month. Equally the more money you put aside in savings, the lesser the chance of needing to borrow and repay money in the future. 

Various rules are circulating online and in books advising how much you should put aside for debt repayments and savings in your personal budget. For instance, the 50/30/20 rule determines 20% of your earnings should be devoted to paying off your debts and building up your savings. But, if you have the wiggle room to save more or if your budget is too tight to save that amount, you can adjust as you see fit.

Spending Money

Takeout, movies, clothes, a daily Starbucks, birthday gifts, alcohol, electrical items are all expenses that can be adjusted in your budget to avoid overspending. For a real insight into your spending habits, take a look at your bank statements from the last few months.

It’s essential to have room in your budget to spend time with your friends and family, and indulge in your favorite pastime. But having fun shouldn’t push you to live beyond your means and spill over into your overdraft. And so you should budget your spending ahead of each month to determine how much you shall limit yourself to spend on things you enjoy.

Living well and having a good time needn’t be extortionate or wasteful. A successful personal budget will help you hone in on your income and outgoings and trim the fat off your existing spending. It enables you to live a balanced life, one where you can cover your necessities, pay off your debts and put money aside in savings, but also have a reasonable amount of disposable income left over to spend as you wish.

 

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