How to Budget Your Money Wisely

Working with a budget has always been difficult for many people. It connotes restriction and challenges people to keep his spending pattern at a certain level. However, if you take a good look at it, a budget is merely a guide on how one spends his money wisely, and having saved some, has more to spend at some point.

So, exactly how do you budget your hard earned money efficiently? These are the things that financial planners have to say:

1. Jot it down.

List down on paper all of your monthly earnings less taxes and government contributions. This may enable you to figure out how much monthly income you've got so you can focus and be directed regarding how much you can spend and save.

2. List down your expenses.
The charges that you should identify and list down here are your basic needs or perhaps the ones you simply can't live without. These are living expenses that include food, utilities, mortgages and rent, if any, and transportation.

3. Allocate your revenue.
This is the most critical as you have to apportion your pay onto your expenses. It's here where you select which matter most for you.
A properly respected registered financial planner recommends that a person has to allocate his income into 60% necessities, 20% savings and investments, and 20% wants.

As previously discussed, the Necessity Expenses are your living expenses. Keeping it at 50%-60% of earnings allows more room for savings, investments, and others.

- Funds for Savings and Investment

Set aside some of your earnings for investments that will bring on passive income at some point. Such investments may be by means of stocks, mutual funds, bonds, government securities, and others.You can also decide to use a part of this fund to put together an emergency savings account to take care of emergency cases like hospitalization, house repairs, and expenses during calamities.

- Funds to Pay Debts

This fund works extremely well for paying debts or credit cards or can be allotted to acquire a car, buy a gadget, and for travel.

- Funds for Life Insurance and Health/Medical Insurance

It is best to have a life insurance coverage once the inevitable happens. Having none can make your family suffer and can eventually be in insurmountable debt.
If you don't have a life insurance cover but want to invest since the stock market is bullish, you might consider buying an investment-linked life insurance policy. This is an insurance policy that gives life insurance as well as investment feature that allows your money to grow.
Possessing a health/medical insurance is incredibly important. If you've found yourself seriously ill just like having a stroke or cancer and you simply don't have any health insurance, your loved ones will definitely be heavily indebted and be in a lifetime of financial difficulties. Thus, possessing a health/medical insurance will unburden your family of any financial obligation.

- Funds for Education

Investing in education can offer better opportunities later on. Buying books and attending training/seminars for self development will further your competency and increase your income.

- Funds for the Church and Loved Ones

This fund would not only include tithes and offerings to the church, but when parents, siblings, relatives, and friends need your financial help. You need to remember though that giving financial aid has to be in line with your available resources.

- Funds for Self Indulgence and Relaxation
Use a separate fund for your self indulgence and relaxation. This may be used to have coffee with friends, go shopping, pamper yourself by having a massage, or whatever you want to have.

4. Implement the Budget Plan
When important things have been laid out, it is time to implement your budget plan. Ensure that the monthly funds for necessities and self indulgence and relaxation are the only funds that you've got staying with you. All others should be kept in labeled jars or envelopes. This could be hard at first, however in due time, it becomes a routine. It's just a matter of self-discipline.
Which means you better start creating a budget plan. It helps you to take hold of your money, prioritize things, and in the end leads you to attain financial freedom, something many people desperately desired to have.

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