People know how important money is, but many are still careless with it. It would be great if everyone had an app that let you track your budget in a few clicks – then people might actually care about their spending habits!
Money is one of the most important resources that we have. We use it to provide food, shelter, and other needs and wants; yet often times we don’t use our funds wisely. However, there’s hope because creating a budget can help increase awareness on where you’re spending your hard-earned money.
Money has the ability to provide you with freedom. It seems, in a lot of instances, that the more money you have, the more freedom you have. One of the ways to be financially stable is to have a good emergency fund. A good rule of thumb for an emergency fund is about 6 months of expenses. Now, that may seem really unattainable to a lot of people, and it can be. An emergency fund is one of those things that you just have to work toward, putting money away bit by bit.
There is no need to wait for a promotion or an annual bonus to start saving. You can start improving your financial freedom by monitoring your expenses, and in many cases improving your education.
Improved Quality of Life
In the modern era, people spend a lot of money on things and services they don’t need. Those who track their expenses can easily see where they are spending frivolously and put an end to it. Budgeting can also help you increase the efficiency of your spending by using savings to purchase better quality items.
The majority of services become subscription-based these days. As a consequence, people have a lot of subscriptions that bill their credit cards monthly, and it’s easy to lose track of them. Having ten services that each charge a $5 monthly fee, you’re spending $50 a month on apps and services that you might only use occasionally.
By auditing these subscriptions, you will be able to save quite a bit of money. It may not seem like it, but $50 a month is $600 a year. That money can be invested in upgrading your computer or buying a new smartphone. Plus, a lot of times, you can find cheaper or free alternatives to apps or services that you’re paying for.
Well-Thought-Out Money Saving
It’s impossible to save funds without controlling your expenses. According to one popular budget managing rule, you should save 10% to 15% of your monthly income. If you don’t want to compromise on the quality of your life by cutting back 15% of your expenses every month, you’ll need to optimize your budget. It can easily be done with the help of thorough monitoring of your funds.
It’s recommended to track all your spending in spreadsheets and build diagrams. You have to note every little expenditure, even if it was a protein bar from a vending machine or a shot of espresso. By having all the data presented visually, you will note what expenses can be reduced to help save money. After analyzing your expenses, you’ll need to create two lists. The first one should simply be required payments like your rent or mortgage, utility bills, and loan payments. Then, add other money spent to the second list. This is where your Netflix, Boxycharm, and Starbucks goes. Once you start to examine these lists thoroughly, you’ll quickly find out what expenses can be reduced.
Investments and Absence of Debt
Budgeting helps you manage your expenses, so you won’t spend more than you want. It also helps to prevent you from overspending, or falling short on your monthly bills. Budgeting, and saving, can also help you save money on purchasing expensive items. It’s not so difficult to save for a couple months and paying cash for a computer, rather than having to put it on a credit card and paying high interest. The absence of debts will positively affect your budget in the future, helping you allocate more funds for savings, investing, and even creating passive income.
How is this possible, you ask? Take a small portion of your savings every month, and start to invest it. Buy some crypto, buy some stocks. Invest in a mutual fund or just a CD. It’s a great way to start learning about these other opportunities, and maybe even make a little profit.
Budget tracking is an essential part of a successful life. By managing your money properly, you can achieve financial security. It will help lower the impact of circumstances beyond your control on your life and make you more independent. By analyzing your spending, you can reassess your outgo, and work toward purchasing expensive items or saving for a great vacation instead of wasting money on small and useless purchases every day. Budgeting can also help eliminate the need to finance small purchases. Your savings can be invested to get passive income that will help you retire early and enjoy your life.