Here Are 3 Easy Tips To Start Budgeting Your Money
A budget is a great way to track where your money is going. Here are 3 easy tips to help you start budgeting your money and gain financial freedom!
Tip #1: Where is my money going?
The first tip, for budgeting, I had to learn was to keep track of my dinero. That was tough! It is annoying, let me tell you, but it really sets up the foundation for financial freedom and it is essential for building wealth. After all, how can you expect to divide your money when you don’t even know where the heck it is going?
So that is our first step! Pick your average month to go through your bank account, gather your bills, and list everywhere your money is going. If you pay mostly in cash, then sit down and list all of them. You can use this electronic Simple Budget FREE download to help you track and visualize where your money is going.
Tip #2: Making Budget Cuts
Okay so I figured out where my money is going, ahora que? Well, we have to figure out what is essential and what isn’t. Now, this doesn’t mean that we have to suck out small joys in our lives. We need these for our mental health too. However, it is a good idea to cut some things out.
Para mi, my subscriptions and dining out were out of control! So I had to adjust enough to reduce some of my spending, but still keep some to enjoy.
I had so many subscriptions, and they add up! I had all the big main streaming services (Netflix, Hulu, HBO Max, etc). So I figured out which ones I actually liked and reduced my number of subscriptions. There were also other subscriptions for games I didn’t even play anymore, oof! Again, I did keep a few, because I am a gamer!
Essential bills, is a tough one because most of the time you are not able to control them (rent/mortgage). However, other bills (phone, internet, etc.), you can try and see if you can reduce them by switching companies, finding promotions, reducing usage, etc.
Tip #3: Decide Your Budgeting Goals
Now that you have adjusted how your money is being spent, it is time to set your budget goals. You want to figure out where you are in your financial journey. Do you have debt that needs to get paid off first? Are you able to start savings? Are you in a position to start investing?
These questions are important to determine what budget to use and determining what you want to achieve. You can use the 50/30/20 or the 70/30/10 budget as a beginner. You can use the 60/40 budget rule if you have the funds to break into more detailed categories. Read more about these budgets in our blog, 3 Easy Budgets That Actually Help You Save Money.
How Budgeting Builds Wealth
So how does budgeting build wealth? Well primero, it gets you in the habit of actively tracking your money. I check my accounts almost daily and this has helped me stay constantly aware of what I have available and where my money is going. .
It helps you create a spending plan that prevents you from overspending or even missing payments due to low funds. You then rack up overdraft fees, late fees, etc. These companies don’t need to get any more of our hard earned dinero!
It helps you set goals and creates a plan to achieve them. For example, if I want to pay off debt, I can set my budget to ensure I have funds to pay off each month. It is also a constantly changing journey. Adjust as you reach goals or when there is a change. Remember this is your unique journey! Building wealth or gaining financial freedom takes time and patience. But, first things first! We have to get your dinero right!
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