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    budgeting skills
    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! Bills are due, so you sit down with your favorite cup of coffee and get to work paying bills. 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 the skills to create a balanced budget and stay on it. Thankfully, this isn’t as hard as it sounds. Budgeting can help you learn where to spend money and where to save money 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?

    First, 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! The hardest part of budgeting is picking a method. 


    For a little extra help, 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?

    1. Calculating Your Spending

    Organizing your spending habits can only get you so far. Not sure where to start? No problem, we’ve got your back.
    Let’s say you have all your basic monthly expenses:


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


    You get the idea. There are a lot of essentials here that need your attention – only you know exactly what your essentials are. 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? This is the perfect opportunity to find out what you need, what you want, and what you really want. 

    You’ll need to replace your clothes some time, but how can you do that without overspending? You might check out thrift stores or garage sales instead of jumping to the mall or your favorite brand’s website.

    You want to spend time with friends, treat yourself, make your life easier… You’re only human! The question is: how can you do this without wrecking your budget?
    These are the questions you need to ask yourself to figure out what you should save or use to pay off debt. Now for the hard part.

    2. Learning Discipline

    The most challenging part of budgeting is following your budget. Sticking to a plan for your money is tricky, especially if you need to make big changes in your day-to-day life. 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 saving some for your 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 necessities but think about it for a second. Housing, food, clothing, transportation, insurance, paying down debt… These are all necessities that you can’t avoid. 


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

    • Stocks 
    • Bonds 
    • Real Estate 
    • 401(k) plans
    • Emergency savings


    Retirement savings should never be touched until you retire, and leave your emergency savings alone unless it’s a real emergency. Investments are pretty similar – the more money you can invest, the greater your returns, so don’t make withdrawals too frequently!

    M1 Finance is an investing tool that can help you invest a little to give you an early start. Every month this builds up to keep you secure. 


    The last part of the rule is the 10%, to use for charity. We all intend to donate to causes we care about or want to help friends who are going through a tough time. One of the best parts of the 70-20-10 method is the room it leaves for following through on this!

    If you don’t want to donate, you can always use this extra 10% to pay off debt more quickly.

    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 for emergencies and retirement, 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. It’s up to you to decide what to do with your money when the time comes for it. 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 can start saving again. 

    Learning these skills takes some time and patience, but budgeting is a breeze once you get the hang of it. This is a huge step in taking control of your money so that you can earn financial freedom.

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    "“Wealth is the ability to fully experience life.”"

    Henry David Thoreau

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