SHARE

Don’t Lose A Penny!

budgeting skills

Disclaimer: Penny Calling Penny is an affiliate website. This means that we get a small commission when you click some of the links in this article. Don’t worry – we’ll never recommend anything we wouldn’t use ourselves.

It’s that time of the month again! And you need those essential budgeting skills that perfectly manage your savings. Also, bills are due, so you sit down with your favorite cup of coffee and get to work managing payments. One by one, each account seems more expensive than the last until you begin to notice something. With each new bill, you lose more and more money until you realize you may not even have enough left to pay them all.

If this scenario sounds familiar, you might need a little extra help developing budgeting skills to create a balanced budget and stay on it. Thankfully, this isn’t as hard as it sounds. Budgeting is a necessary skill to help you spend money where it needs to be spent. Done correctly, it can help you save money and pay off debt quickly, even on a zero-based budget. So, get out your monthly budget planner template, and we’ll help you create a budget plan that will save you time and money.

What Budgeting Skills Do I Need?

Budgeting requires basic knowledge of money management. That means you have to sit down and think about all the things you spend money on to get an idea of where to cut expenses. Sounds easy, right? And it is, but most people may not know the best way to create one or stay on track with their spending.

For a little extra help with budgeting, there’s a free budgeting app called Mint that helps you keep track of your spending and can even sync to your bank account. What better way to save precious time than to use apps that do the work for you? The rest, however, is up to you.

1. Calculating Your Spending

We already told you that organizing your spending habits can only get you so far. If you don’t know how to evaluate what you spend, then let us explain it to you. Let’s say you have all your basic monthly expenses, such as:

• Water
• Heating
• Mortgage
• Electric
• Gas
• Student Loans
• Credit

You get the idea. There’s a lot of essentials here that need your attention first and foremost before entertainment. Got them all down? Good, now you have to figure out how much your essential needs cost. Now that you’ve figured that out, how much do you have left to spend on entertainment? This is the perfect opportunity to find out what you really need. Can you wait until that new movie comes out on DVD? Can you skip that expensive name brand coffee this morning and make it yourself?

These are the questions you need to ask yourself to figure out what you should save or use to pay off debt.

2. Learning Discipline

Now you have your expenses figured out. Now comes the most challenging part of budgeting, and that is actually following your budget. Sticking to a plan requires more discipline than most people think, especially if you choose to use most of your entertainment money to pay off debt. That’s not saying you can’t or shouldn’t do it, but you also want to live a happy life while you’re on your debt paying journey.

That’s why the 70-20-10 rule is such a powerful tool to help stay on track. The 70-20-10 rule is a balanced way to spend money on things you need while also save some left over for your own personal use.

70% of your paycheck should go to paying off essentials like those mentioned above, so if you make $3,000 a month. You’d end up getting $2100 out of that as your 70%. You may think this is a lot of money to pay for basic necessities, and you’d be right. This percent is designed to give you enough money to pay the bare minimum plus some extra to help pay off debt. This will help you pay off debt faster.

For your 20%, which is saved for investments, gets taken out of the remaining $2100 to be $420 of that is reserved for your future. This can include:

• Investments
• Real Estate
• Savings

M1 Financing Tool

Whatever will help the future you for retirement or emergencies should never be touched until the time comes. M1 Finance is an investing tool that can help you invest little to give you an early start. Every month this builds up to keep you secure. That’s why it’s always important to start early so that you save more in the long run.

The last part of the rule is the 10%, to use for charity or debt. So that $420 becomes $42. This may not seem like much, but $42 extra to pay off debt can be beneficial when used with any extra from the 70%. Plus, that $42 can also be used for charities which is a unique feature to the 70-20-10 in that it leaves room for donating.

Any money left over from this important management tool is yours to do as you please. You can put it back into debt or savings, or you can spend it on yourself while investing in Acorn. Everything you buy with that app is rounded up and invested into stocks. This can help save you even more.

3. Learning to Plan Ahead

We all know life is full of surprises. Learning how to adjust your budget to fit your needs is necessary. Say you have enough saved in your savings, and you decide you want to splurge a little and take your family on a cruise. This is a small example, but the idea is that your budget plan is not set in stone, and it’s up to you to decide what to do with your money when the time comes for it.

It can happen; maybe a disaster strikes, and you don’t have enough in your emergency fund? You need to know how to adjust your budget to fit your needs until you start saving again. You can also check out Haven Disability to help out if you stop receiving checks due to a severe injury preventing you from work. This can create a relief bunker so that you don’t have to worry about losing money.

Learning these budgeting skills takes some time and patience, but it’ll be a breeze once you get the hang of budgeting. This is a huge step in taking control of your money so that you can earn financial freedom, so make sure you practice these skills to pay off your debt quickly.

About

About

"The habit of saving is itself an education; it fosters every virtue, teaches self-denial, cultivates the sense of order, trains to forethought, and so broadens the mind."

T.T. Munger

You May Also Like

SEARCH

DON’T LOSE A PENNY

Subscribe to our email list to get the latest and greatest Penny Calling Penny articles sent right to your inbox.

DON’T LOSE A PENNY

Subscribe to our email list to get the latest and greatest Penny Calling Penny articles sent right to your inbox.