Planning and Goal Setting
Everyone has a different lifestyle and way of life, so it depends on your needs. Set goals:
Short-term goals that can be accomplished in a month.Medium-term goals may take several months.Long-term goals may take a year or more.
The goal may be to buy something, save a certain amount of money, or achieve a specific income level. It’s important to remember that this is not a wish: in contrast, a goal has a timeline, a realistic one, and planned actions to achieve it. If you’re planning to make an annual budget after that, you need to put your goals into it – take them into account in your expenditure in advance. And then you’ll need to move according to the plan: control expenses, save money to accumulate the necessary amount or gradually increase income. It all depends on what you have planned.
Personal Monthly Budget
If you want to count and plan your finances but are not yet confident in your abilities, you can start by making a personal budget for a month. Specialized apps can help with this. They are convenient for setting daily spending limits and adjusting their parameters, and writing down various expenditure items. To make it easier, let’s break down your actions into steps:
write down your sources of monthly income and calculate the amount you accumulate in a month;identify items of expenditure and determine an approximate budget for each of them;set a daily spending limit;try to follow a plan.
It’s okay if you make a mistake or set a limit incorrectly at first. The table can be adjusted over time; that’s fine. The main thing is to take into account important details beforehand.
Mandatory Expenditure Items
Expenditure items are mandatory and optional and permanent, periodic, and emergency. Their distribution can vary depending on your lifestyle – over time, you’ll be able to find a comfortable format. But some expenditures should be a priority because you can’t do without them:
utility expenses or rent;
payments on financial obligations, if you have them;
Setting aside a certain amount in a savings account if you are saving for something. It is best to try to do this regularly;
Household expenditures: food, transportation, children’s education.
Mandatory but irregular expenditures include expenses for car service, your health, or buying some non-urgent but important items.
Non-Mandatory Expenditure Items
They include purchases and expenses without which there is no need: going to restaurants and cinemas, unimportant but pleasant purchases. If the budget allows, it is unnecessary to refuse optional expenses at all, but their priority should be lower than that of the mandatory ones. It is believed that the monthly personal budget should be distributed as follows:
50% should be spent on priority and mandatory items;
30% should go to non-permanent and non-mandatory items;
20% is better sent to a savings account.
However, everyone’s situation is different, and if your circumstances do not allow you to adhere to such a scheme, it is not a problem. The main thing is to strive for it. And do not forget to save money.
Daily Limit
It’s important to account for all expenses and stick to a daily spending limit. You can save on unnecessary items and distribute your finances more efficiently with this approach. If something doesn’t fit into your daily spending limit and isn’t a priority, such as buying food or paying off a loan, don’t buy it. This way, it will be easier for you to save money, and you will not get into a situation where finances are spent on something you don’t understand.
Personal Budget for the Year
If you have successfully planned and, most importantly, executed a budget for the month, you can try making a personal budget for the year. The approach remains the same: write out sources of money and expenses, categorize them, and set limits. A convenient option is to divide the annual plan by months, taking into account the peculiarities of each period. In this case, the table will represent 12 monthly budgets, which are combined and influence each other. For instance, if you spent more than you planned during a certain period, the next month, you will have to save to stay within the approved limits.
Conclusion
All of this may seem complicated, but get used to it, and it becomes much easier. You will stop spending too much on unnecessary items learn to prioritize and save. And in the longer term, making a personal budget will help you achieve your goals faster and avoid difficult situations. The main thing is to start, and soon you will notice how much more rational your spending has become.
Δ
