It’s essential to pay attention to what you have regarding possessions and finances during any uncertain period. Knowing how to budget can result from your upbringing, where basic knowledge about finances is subconsciously obtained at an early age, what you’ve been through, or you’re currently learning how to do it, due to the pandemic and the upcoming recession. Tracking your budget can be easy for some, while others can feel restricted. Whatever the case is, we will focus on why it’s essential to know how much money you have at any moment to feel more confident and make smart moves. This is what’s important if you want to manage your finances better.
Set a goal
Is your journey a journey if you don’t have a goal? Goals are crucial when tracking your finances since they can stop you from mindless shopping, and often you can achieve them faster because you are focused on getting there. The goal itself is entirely up to you. It can be something small, from getting a present for your friend to saving up for a car. Maybe you want to pay off your debt. Whatever it is, it’s something to work on, and you will need a plan for it. During a crisis, some things can be put on hold (like presents, as an example), but debts still exist. We know it’s hard. The purpose of this article isn’t to make you more anxious – it’s to trigger off your journey towards saving as you are tracking your finances, and noticing where you are overspending (which is a common thing during uncertain times).
Making a plan
Set some time aside, and the first thing you will do is put on a piece of paper how much money you make monthly. From there on, you will need to check your credit card score, any credit card you might’ve forgotten, but it still pays for some subscription (you completely forgot about). Try not to have too many cards. If you do, see how much of them you need. People will often realize they don’t need as much, and it just scatters around their expenses endlessly. Request a credit card report to see where you were spending money for the last month. We guarantee you won’t even remember individual purchases, and that is precisely where you could save up your money – on the small things.
This doesn’t mean you have to give up on everything that makes you happy – it means being responsible towards yourself and seeing some alternatives that could even turn into a hobby. It can be borrowing books from a library instead of buying them, cooking more at home, even if it’s a small thing, and you are not an expert and buying when things are on discount. Maybe reconsider visiting second-hand shops if you like to buy something (you will support ethical and sustainable business in the meanwhile).
50/30/20 rule
For some, it might work great, while for others, it can be uncomfortable, but it’s worth trying out.
What this rule implies is that 50 percent of your money should go to what needs to be paid (rent, bills, etc.), 30 percent should go on what you like (clothes, makeup, gym memberships, etc.), and 20 per cent should go to your savings account. Considering this, we still need to track our budget, so having an app that will help can be a great choice if you forget to track everything on a piece of paper (and you don’t want to get overwhelmed).
Apps can help you share your income with your spouse or have a clearer picture of what you are doing. During the first month, don’t expect everything to go smoothly and be so hard on yourself, so you give up after your first “bad” purchase. But the first month will help you see what type of spender you are. Having an app can get you a possibility of getting a monthly pie chart where it can be easy for you to grasp your expenses (if you are more of a visual type). Pay attention to setting up a plan, since it’s crucial for tracking any progress, and you will be able to save up and delegate your money correctly. Good luck!
