TWO WAYS YOU CAN BUDGET YOUR SALARY TO AVOID GOING BROKE!
We all know that money doesn’t come in easy these days, and when it does come in- vam vam vam… it’s gone. It’s the dilemma of everyone, especially those who live paycheck to paycheck, and even the financial savvy amongst us still have a hard time holding it down.
For this reason, we will share with you these tips and tricks on how to spend your salary without going broke.
1. THE NUMBER RULE– You just got paid and you’re off to the market. No, hold up! Where is your budget? A list of the things you need to prevent you from spending impulsively. You need a budget!
Ever heard of the 50–30–20 budget rule? It is a financial management system that helps you allocate your income properly to avoid overspending on certain things. This rule divides your paycheck into priorities: 50% for the essentials, 30% for savings, and 20% for everything else.
Essentials: Rent, Food, and other housing costs
Savings: Savings and investments
Everything else: those things you want but don’t necessarily need such as eating out, clothes, gym, or certain internet subscriptions.
Bear in mind that these categories are not one size fits all as they may vary individually. If this rule feels too complicated, you can try the 70–30 rule. Here, all you have to do is take 30% of your income and save or invest it and do with the rest however you want. See, very easy!
The trick to doing this rule flawlessly is to set up an automated withdrawal system that takes out 30% of your salary every month. That way, you are guaranteed an emergency fund when you need it and there are efficient digital platforms with which you can do this very easily. One of such is Saversclub
2. MAKE YOUR OWN RULES- If you don’t want to follow the rules above, that’s okay. At this point, creating your own rules is allowed. Find out what budget scheme works for you and stick to it, but no matter what you do, do not ignore savings and investments.
You can create a quick budgeting checklist:
· Calculate your expenses and refer to your bank statements to make sure you’re jotting everything down. Mortgage or rent expenses are very easy to remember, but we live in the age of subscriptions, where those streaming or gym expenses may filter through unnoticed.
· Determine your post-tax income. Once you know how much you spend, determine your net monthly income after taxes. Now that is how much you truly earn.
· Set your payoff & savings goals. Once you have all these numbers down, you can decide where your money will go each month and what disposable income you can make use of.
· Keep track of your expenses. It is very important to do this. Save all your cash payment receipts and compile them with your card statements at the end of the month and see if you’re overspending in certain areas or if you have a few extra cash to save. If the latter is the case, save it.