Living and enjoying the present is important, but there are also some things that need to be planned in the medium and long term. This is the case with personal finance.
As much as many people put it off, doing financial planning thinking about a monthly budget is ideal for achieving your goals.
And with a few habit changes and a little organization, you can plan your next steps. Want to spend a year traveling the world? Do you think of one day living in the countryside or on the beach? Looking for a peaceful retirement ?
No matter what your goal is, the simplest path to it is in the organization! So keep reading to see tips on how to organize your budget.
How important is it to make a monthly budget?
One thing we’ve learned in recent years is how a situation can change overnight. The Covid-19 pandemic took everyone by surprise and many felt the impact on their financial lives.
This instability is one of the reasons for investing in financial organization . Having a balanced monthly budget will also help in adverse situations.
Not to mention that you certainly have dreams and goals to fulfill, and planning what you do with your money can help you achieve them. In addition to avoiding situations of stress and anxiety.
Now let’s check 6 tips on how to organize finances by making a month-to-month budget.
See 6 tips for making your monthly budget
1. Write down all cash inflows and outflows
Check all family expenses and write everything down. Include all your household income and expenses.
Water, electricity, internet, condominium, financing, in short, all fixed expenses, which must be paid monthly.
And also, don’t forget food, leisure, travel, transportation and other expenses that may vary depending on the month. You can set a limit value, this is part of the organization too. The most important thing is to have a record of everything.
For example, it may be that in two months you will have an extra expense because someone in your family has a birthday. These variables also need to go into the monthly budget.
Income should also be included in your planning: salary, bonuses, investments, extra income. Everything you earn in the month.
Once you’ve done this, you’ll have an idea of what you need to adjust to balance your budget. You may need to make some cuts, for example, or maybe you have some money left over and it’s time to start investing .
That’s why the organization is so important, from it you will be able to make good decisions about your money.
2. Set goals
Where do you want to get? What do you want to achieve? Write down your short, medium and long term goals.
Create a list and write everything down. Of course, dreaming is always good, but have realistic goals.
Now comes another question: how do you want to get there? What do you need to do? Let’s give an example: to travel next year, you need to choose the destination, plan the trip, save and invest 10% of your salary every month.
Of course, medium and long-term goals require more planning.
3. Reevaluate your goals from time to time
We told you that things can change quickly, so don’t forget that your budget and goals can repeat that movement.
Each time, your goals, because you may need to adjust something. You might, for example, have planned your monthly budget before changing jobs or getting a promotion.
Or maybe you’re not managing to handle all the expenses, or you’re doing it more easily. So whatever the case, it’s best to make a goal adjustment.
4. Live within your monthly budget
Don’t make a budget and set goals and then do everything backwards. The organization of finances is for you to live better. So have a standard of living that makes sense with your income.
Keep the balance and always try to spend less than you earn to exist also invest, think about the future. Remember that financial organization is a marathon and not a 100-meter race. Reaching the finish line takes determination and patience.
A popular method of splitting expenses is 50 30 20 .
In this division, you set aside 50% of the money for fixed expenses, those that you cannot escape and depend on for a living. For example, rent, water, gas, electricity, etc.
The 30% is destined to variable expenses, which are: leisure, tours, concerts, gifts and everything that is not essential, but you like to do every month.
The remaining 20% will be used to invest in your family’s safety and future, but we’ll talk a little more about this subject in the next tips.
5. Create an emergency reserve
You know that unexpected problem that affects all your finances? Yeah, that’s what you should create an emergency reservation for . To help in those unexpected moments of life.
An unforeseen event can happen at any time, be it a medical expense or loss of income.
Therefore, planning is important, having a well-made monthly budget, you program yourself for any situation . And having this reserve frees you from borrowing, over drafting or having to delay a bill.
6. Think long term
Time will pass anyway, so make it run in your favor. Invest in your future and start building wealth.
When talking about goals, many people forget the long term. But the sooner you start, the better your income will be, the greater your equity. After all, where do you want to be in 10, 20, 30 years?
