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Budgeting is when someone calculates how much money they spend versus what they bring in, before creating a strategy to ensure that the former doesn't exceed the latter. This is a common practice, not only among those that are careful with money but people that are considerably wealthy as well. Budgeting allows you to save money, but there are a few ways to go about it well. Here are some do's & don'ts offered by Robert Jain.
DO use spreadsheets to make things easier for yourself. According to reputable names such as Bobby Jain, spreadsheets are ideal for keeping track of finances. Not only can they keep your data organized, so that you don't have to sift through multiple pages, but you can pull up said spreadsheets from anywhere. Simply put, you will never be without your information. This is a relatively basic step, but it's one worth taking all the same.
DON'T forget to differentiate needs and wants. Ask yourself a question when you're about to purchase something: do I need this? If you're starting a new office job, a laptop computer may be needed. However, if you want to go away for a vacation, this can be considered a want, therefore making it less essential when looking at the bigger picture. Differentiating needs and wants will make budgeting considerably easier.
DO account for emergencies that may arise. These include, but aren't limited to, broken bones, job loss, and automotive costs. Before these arise, it's in your best interest to create an emergency account. What this will do is allow you to slowly save money over the course of time. Before you know it, you'll have a sizable account that will only be used in these types of emergencies. Having a separate account goes a long way from a budgeting standpoint.
DON'T create a budget unless you plan on reviewing it. As a matter of fact, this is one of the most important aspects of budgeting, no matter how much you make. Once you've recorded your spendings for the month, go back and review them. Have you been staying within your limits? Are there areas to be improved upon? By asking yourself these questions during the review process, budgeting will become that much easier.
DO use spreadsheets to make things easier for yourself. According to reputable names such as Bobby Jain, spreadsheets are ideal for keeping track of finances. Not only can they keep your data organized, so that you don't have to sift through multiple pages, but you can pull up said spreadsheets from anywhere. Simply put, you will never be without your information. This is a relatively basic step, but it's one worth taking all the same.
DON'T forget to differentiate needs and wants. Ask yourself a question when you're about to purchase something: do I need this? If you're starting a new office job, a laptop computer may be needed. However, if you want to go away for a vacation, this can be considered a want, therefore making it less essential when looking at the bigger picture. Differentiating needs and wants will make budgeting considerably easier.
DO account for emergencies that may arise. These include, but aren't limited to, broken bones, job loss, and automotive costs. Before these arise, it's in your best interest to create an emergency account. What this will do is allow you to slowly save money over the course of time. Before you know it, you'll have a sizable account that will only be used in these types of emergencies. Having a separate account goes a long way from a budgeting standpoint.
DON'T create a budget unless you plan on reviewing it. As a matter of fact, this is one of the most important aspects of budgeting, no matter how much you make. Once you've recorded your spendings for the month, go back and review them. Have you been staying within your limits? Are there areas to be improved upon? By asking yourself these questions during the review process, budgeting will become that much easier.
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