Making changes to a few of your daily habits can help fix your budget and create a stress-free financial future. There are benefits to creating a spending plan and setting goals for the future. A couple of advantages are less stress around financial uncertainty, increased funds for emergencies, and even the ability to travel by paying cash for vacations. Let's take a closer look at how you can control your financial future, identify financial priorities, and increase your income.
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1. Identify Your Income And Expenses
Write down your income and expenses. Your income can come from multiple sources, especially if you are a business owner or consultant. When creating a budget, use income from steady sources, like a paycheck, disability payments, or pensions. Your monthly expenses could include your rent or mortgage, insurance, car loans, gas, utilities, groceries, and more.
2. Define Your Goals
After you have identified the surplus income that you have, you can create your financial goals. Goals can be short-term, mid-term, or long-term. If you are single, establish your goals and identify someone who can keep you accountable for achieving them. If you have a significant other, you can plan your goals together. Some couples also find it easy to have individual savings goals as well.
3. Create A Spending Plan
A spending plan can be specific to you. There are two rules of thumb that some individuals use. The first is the 50/30/20 rule of thumb. The second is the 70/20/10 rule of thumb. For example, 50% of your income will go towards your needs, 30% towards your wants, and 20% towards your savings. The key is to set a spending plan and stick to it and make any necessary adjustments as needed.
4. Start An Emergency Fund
For the most part, emergencies are unpredictable. Creating an emergency fund for unexpected expenses can reduce the need to use your credit card for emergency events. A good rule of thumb is to set aside three to six months of your monthly income in an emergency fund.
Keep track of your income and expenses using a weekly or monthly budget planner. This will help you identify the money you have coming in and the money you have going out on a steady basis. A budget planner also helps you keep your spending under control and can guide you in adjusting your budget due to fluctuations.
7. Cook More Meals At Home
Cooking at home is cheaper than eating out at a restaurant. Changing your habit and cooking at least one extra meal a day at home can save you at least $300 a month. Involving your significant other or children in meal planning can help ensure commitment from everyone.
Planning your grocery shopping can reduce the time that you are in the grocery store. It can also eliminate the need to go down every aisle looking for what you need. Creating a list before leaving home can get you in and out of the store quickly. You can even involve your children in meal planning to develop more creative ideas for family mealtime. To further control spending, schedule your grocery pickup online using an app. Online scheduling can reduce impulse buying that results from browsing the aisles or shopping while you're hungry.
9. Avoid Spending Unnecessarily
Avoid making purchases when you are bored or when your emotions are running high. Shopping from boredom can cause you to make purchases that you don't really need. Shopping from sadness, anger, and even happiness can cause you to make purchases that you may end up regretting later. One tip to avoid unnecessary spending is to walk away from your online shopping cart and see if you still want to make the purchase the following day.
If your income does not cover your monthly expenses, try and find other creative ways to save. If that doesn't work, you can start a side hustle to increase your income. Most side hustles consist of skills or knowledge that you already possess. So, starting a side hustle can be a seamless transition to taking charge of your financial future and enhance the skills you already have.
For more tips and tricks on how to control your finances, schedule a consultation today to learn how a financial workout plan can help.