deepstash

Beta

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

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.

193 SAVES


This is a professional note extracted from an online article.

Read more efficiently

Save what inspires you

Remember anything

IDEA EXTRACTED FROM:

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

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

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

moneyunder30.com

5

Key Ideas

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.

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.

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.

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.

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.

EXPLORE MORE AROUND THESE TOPICS:

SIMILAR ARTICLES & IDEAS:

Refinancing your home
Refinancing your home

When mortgage interest rates get low, refinancing isn't always the best choice.

Deciding when to refinance your home loan depends on several factors besides whether you...

Reasons to refinance your mortgage

The two big reasons to refinance are:

  • To reduce your monthly mortgage payment
  • To save on the overall interest you will pay on your house in the long run.

Refinancing does not always reduce the monthly payment or save on the overall interest.. A loan officer or mortgage broker can help you run scenarios that show you the cost and potential savings of refinancing.

How long you keep your home

Generally, it makes sense to refinance if you plan on staying in your home for many years.

If you plan to sell the property soon, don't refinance. Refinancing could take years to break even and begin saving you money.

one more idea

The snowball debt method
The snowball debt method

With this method, you pay off your debts from the smallest balance to the largest balance, regardless of interest rates.

When you pay the smallest debts first, you start to...

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.

You will pay less in interest if you pay off your debts in this order. You will also pay it off faster.

Deciding between the Snowball and Avalanche debt methods

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.

Make the minimum payments on all of your debt. Then, focus on one debt that bothers you the most and put every dollar you can towards it until it is gone. Then move on to the next debt.

A Monthly Budget For Your Money

No matter how little or how much money you earn, creating a monthly budget is one of the most important aspects of managing your finances. What gets measured gets managed.

...

The Envelope System

The Envelope system is a way to track your variable expenses like food, entertainment, and drinks.

This method, preferably used weekly, allocates a certain amount in each category in labeled envelopes (food, drinks, movies, etc.). Once the envelope is empty, you are done spending in that category.

How to Create a Good Budget

The principles that make a good budget, something you can stick to:

  • Being Realistic: Being too strict is a recipe for failure.
  • Making Adjustments: A budget is not set in stone, but a fluid thing.
  • A Team Sport: If you live with a partner or spouse, you have to agree mutually on how to budget the financials.
  • Expect the Unexpected: Keep an emergency fund, ideally 3-6 months of necessary expenses.
  • Budgeting the Expected: Certain upcoming expenses need to be budgeted in advance, like property tax, holiday shopping, etc.

2 more ideas