Feeling like your paychecks aren’t lasting long enough in your piggy bank? Maybe your budgeting has something to do with it.
Many people have heard of the 50-30-20 budgeting rule. In short, it means spending 50% of your paycheck on things you need, 30% on things you want, and 20% should be put in savings.
Nowadays, this rule doesn’t seem to cut it for the average person.
With high prices in energy and food for quite some time, people’s paychecks seem to be feeling smaller. Although this may seem true for most, it is only a question on how well people have adapted their budget to modern times.
Here are some quick tips on how to budget effectively moving forward:
Create a Monthly Expense Report
The first step to making a good budget is to calculate monthly expenses. There are going to be fixed costs and costs that are variable by month.
Rent and utilities are usually the biggest costs. Although rent is fixed, utilities vary by month, in which case it is better to overestimate the expense by month by as little as possible.
Groceries are another expense that vary as often as weekly, so an overestimate is okay. The cable/internet bill should be fixed as well as any subscriptions/memberships like the gym or streaming services. If someone has a car, the insurance payments are fixed, and gas expenses can be estimated.
Once the monthly expense list is created, it is good to compare that to how much the household makes per month. Finally, it’s worth seeing what expenses can be cut and which can’t.
Budget on Variable Expenses
Groceries and utilities are perhaps the two biggest variable costs for any household. This means there’s something people can do about it.
Take a look at how much is spent at every grocery visit for the month. Consider what items are sometimes purchased that aren’t necessary. Afterwards, determine by how much each grocery bill can be reduced realistically. Multiply that single grocery bill budget by the number of times you make groceries a month, and that’ll be your monthly budget.
When groceries go up in price, try substituting some things for cheaper alternatives. In terms of utilities, simple things like turning the lights off when it isn’t being used can help reduce the bill. Showering twice a day all week can be reduced to only five days and so on and so forth.
Search for Options!
Not every grocery store or gas station has the same prices for everything.
Most stores have their own coupons or rewards cards that some people don’t take advantage of. These are points that provide savings from time to time! The grocery magazines that people throw out… those have valuable information! If meat is substantially cheaper and good quality in one store, it’s worth buying the rest of the groceries somewhere else.
Furthermore, some parts of a city can offer lower gas prices than areas near you. This can be especially true in cities like Los Angeles and New York.
In addition, there are programs that combine grocery expenses to gas points. There’s a lot of research that can be done in the neighborhood to cut costs.
People’s laziness is what prevents them from saving money this way, so that habit needs to change.
Reduce Streaming Services
Everyone needs some form of entertainment. However, many people take that a little too seriously and purchase plans for every streaming service available.
That would include Netflix, Hulu, Max, Paramount+, and Apple TV. Assuming those subscriptions include no adds, the monthly expense can easily be at least $70 a month. We know there are many great movies and shows in every platform, but they can eventually make it to other platforms.
Thus, I would recommend having only two subscriptions and include ads in the plan. There are many deals that fly around allowing people to stream for as little as $2.99 a month for a few months. Someone’s budget can save up to $60 or more by reducing the streaming services they own.
Consider doing this as soon as possible.
Budget Leftover Money for Your Wants
The most common wants people have are shopping, eating out, and attending events. It’s important to remember that these are just that, WANTS!
If someone normally eats out every day for lunch, they should try eating out only once or twice a week. Meal prepping may be more convenient for the week.
On the contrary, if someone spends 20% of the money left over after accounting for expenses on shopping, that can be reduced.
Simple things like taxis ordered per month or number of times going out to a club can be worked on and improved. If 50% of one’s monthly income can be kept to oneself after accounting for expenses, there’s no reason only 10% of that makes it to a savings account month after month.
In conclusion, there are different ways to budget for everyone. There are the necessary expenses, but also the expenses that are optional. Everyone’s take can be different to that regard.
A good way to approach the idea of budgeting is to think of it as working towards a better future. Whether it’s a vacation, a house, or a new car, there are good reasons out there to budget. Of course, it is healthy to spend some of that hard earned money on treating oneself, as long as it’s not overboard every month.
Follow the advice above and those paychecks may feel larger again.
