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What Does A Realistic Budget Look Like? - Money Under 30

https://www.moneyunder30.com/realistic-budget

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What Does A Realistic Budget Look Like? - Money Under 30

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Regular monthly bills

Regular monthly bills

The bulk of your budget is made up of necessities like rent, phone and internet bills, insurance, etc. If you can lower your monthly expenses, you can save a lot for unplanned events.

  • Find a cheaper place to live.
  • Get a cheaper phone plan
  • Find a better insurance company
  • Grocery show once a week, so you don't waste food.

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Debt when you're on a tight budget

There are a couple of paths you can take to pay off your high-interest debt when you're on a tight budget.

  • The snowball method. For those who need to see progress, pay off the lowest balance first. You'll feel inspired to keep going.
  • The avalanche method. Choose the debt with the highest interest rate to pay off first. This may require larger monthly payments and will take longer to see progress, but you will save the most money in the long run.
  • If you need to prioritize your credit score, focus on paying down your credit cards first. Paying the ones you are near to maxing out will improve your score quickly by a few points.
  • Set up payment plans, even if you can only afford a few dollars at a time. That way, your lenders can see you're paying something.

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Incorporate unplanned entertainment in your budget

Financial professionals will advise you to cut out expensive nights out. In truth, you will have night's out, even when you're dirt poor.

To incorporate unplanned entertainment, set aside an amount each month. Be realistic. You can open another savings account for fun spending or you can use cash only.

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Things you don’t usually think about when budgeting

  • Emergency funds are essential, even if you put a bare minimum towards it.
  • Birthdays, Christmas, or car registration are expenses you should be able to plan for. Set aside some money towards it every week, and by the end of 12 months, you'll have a set amount to spend on these items.
  • If you have pets, you'll need to include a portion of your budget for their food and vet bills.

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Budgeting apps vs pen and paper

There are many great budgeting apps. However, apps can be frustrating and boring to use, or we may just get lazy.

Sometimes a pen and paper work best because it gives you a hand in your budget. With this method, you can also change your budget when you need to include extra expenses.

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The snowball debt method

The snowball debt method

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The avalanche debt method

In the debt avalanche method, you pay your debts from the highest interest rate to the lowest interest rate, regardless of balance.

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The supporters of the two methods are both enthusiastic about which one to use. However, it barely matters which system you use. The best approach is the one that keeps you motivated.

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Self Control And Laziness

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