There is so much information on the internet about budgeting that it can actually be overwhelming. Not only that, but it can also be frustrating: you will read articles saying you need to put away at least 20% of your paycheck while you struggle to save only a few bucks.
If that sounds familiar, you need to know that you are not alone: Over 38 million Americans are living paycheck-to-paycheck, so saving money is a real struggle. You need to try boosting your budget without hating it!
You might think that your current budget allows little to no improvement whatsoever, but if you track your expenses on any given month, you will most definitely find things to change and rearrange that will allow you to start making progress when it comes to your personal finances. But there’s more to saving than just making the most out of your money. You can also find ways to make more money or to make your money work for you.
Get a side gig
It is hard, yes. But if you want to stop living paycheck-to-paycheck, you need to either cut your expenses or get a second job. It doesn’t have to be a big thing, you can get a side hustle and manage your hours and workdays, so you will be able to make a few extra bucks that will help you get ahead.
Try to negotiate better credit card rates
A lot of people think that credit cards are there to just drain your budget and there’s nothing to do about it. But keep in mind that credit card issuers are doing business. A survey shows that 56% of users that contacted their credit card companies asking for lower rates were successful. Try to contact them and negotiate better conditions, worst case scenario they will just say no, so why don’t you give it a try? If you manage to get a better deal, your financial situation will improve dramatically.
Make a reasonable budget
After a few months of making extra cash, you will be able to rethink your budget and adjust as necessary. There are some things you should keep in mind:
Emergency fund: it’s important to build an emergency fund as soon as you can start saving money. This way, should something unexpected happen, you will be able to use that money and not incur debt and fall behind again.
Account for entertainment: include nice things in your budget. This is the only way you will be able to maintain the habit through time. There’s no other way around it. And it should be guilt-free, too. You work hard, you deserve some fun!
Pay off your debt: as you start to have more money freed up, you should attempt to use it to pay off your debts. There’s nothing like the feeling you get when you’re debt-free after having been in a rough spot!
Understanding the 50/30/20 rule
There are many types of tactics you can apply when you need to organize your personal finances, but one of the most efficient ones is the 50/30/20 budget. Here you will find a guide to understand how it works.
Are you finding it hard to create a budget and then stick to it? It isn't easy to organize your finances and even save money, but there's a type of budget that might help you achieve your goals.
If you are wondering how to build your budget, you should try a percentage-based one. Here's a guide to learn how they work!
What's a percentage-based budget?
Unlike other budgets, which are based on your past spending, the percentage-based budget considers the present and the future of your finances based on how much money you can spend and save from your income.
This type of budget will divide up your monthly earnings into percentages to be destined to your expenses, savings, debt, and other categories you choose. By applying this method, you will know exactly how to allocate your funds so that you can save money and pay your bills at the same time.
The 50/30/20 budget
The most famous percentage-based budget is the 50/30/20 method. It works the following way:
• 50% to your needs: Half of your income will be destined for your expenses that include food, rent, utilities, loans, etc.
• 30% to your wants: This percentage of your income will be spent on your personal expenses or wants. These may be shopping, dining out, travel, gifts, gym membership, etc.
• 20% to your savings: The rest of your income should go to save. You can deposit it into your savings account, emergency fund, or retirement plan.
Bear in mind that the percentage doesn't need to be exactly like this! You can also try with a 60/20/20 or 40/20/40, depending on your income and your needs.
Don’t forget gifts! Here’s how to include gift-giving in your budget
Gift-giving may harm your personal finances if you don’t plan for it carefully. That is why you need to set up a gift-giving budget. Here are some tips you should follow.
1. Calculate your gift-giving budget
To plan your budget it is important to calculate how much money goes into gifts, and not only choosing an arbitrary number. Once you have determined how much you spend on birthdays, anniversaries, Valentine’s day, and holiday gifts, you should add 15% (for unexpected gifts) and divide the total number by 12. The result shows how much money you need to save every month for presents.
2. Stretching your budget
If the present you want to give to someone comes to more money than you budgeted, there are ways of solving the problem.
One option may be sharing the expense of the present with family members or friends. This way you can give pricey gifts.
Another option is shopping for big sales like Back Friday or buying things offseason.
3. Budgeting for special occasions
There are special occasions and celebrations which don’t happen every year, where christenings, weddings or important birthdays and anniversaries are included.
Knowing how much to spend on a wedding present is a bit easier than the rest: you spend the equivalent to the price per head for attendees of the wedding.
Calculating the other presents will depend on how big the celebration party is and how close you are to the host or honored person.
Including as many presents as you can in the budget will help you be prepared for these expenses. Unexpected presents are included in the extra 15% you estimated, but you may need to adjust it a bit if you have important unforeseen parties or unplanned celebrations.