Money saving apps

Things Every Budget Needs

 Your budget needs more than basic calculations to work. To be really effective, it needs to have the following three things: savings, fun money and flexibility.

1. Savings

If all of your money is getting spent by the end of the month, you’re not budgeting properly. You need to have some wiggle room in your budget for savings. Otherwise, you’re leaving yourself vulnerable to unanticipated costs. 

To be proactive, you should collect these monthly savings and add them to a savings account. This savings account can act as your emergency fund in the future. In time, you can dip into the fund whenever you need to pay for an urgent repair or appointment that’s outside of your budget. 

An emergency fund takes time to build up. So, if you don’t have enough savings to cover an unexpected expense, you can turn to a website like CreditFresh for a back-up plan and apply for a personal line of credit. A personal line of credit is an open-end credit tool that allows you to withdraw borrowed funds within your credit limit and then deposit them in your bank account. So, if you need to pay for an emergency, you can use this tool and manage repayments in the future. 

2. Fun Money

Budgeting is similar to dieting. When you’re too restrictive with the rules and deprive yourself, you’re bound to get frustrated and quit. 

You can’t be so hard on yourself. If you like ordering takeout on Friday nights or getting a new video game once in a while, that’s okay! Even financial expert Dave Ramsey admits that fun money is an essential element of your budget. Acknowledge the expenses that bring you joy in your financial planning. You’re more likely to stick to your goals when they’re not so punishing.

3. Flexibility

Your budget isn’t written in stone, and if you think of it that way, you’re not going to be happy with it. It has to be flexible so that it can adapt to the demands of your life. Some months, you will need more money for clothes. Some months, you’ll want to walk and bike outside, so you’ll spend less on transportation. Things change.

So, how can you keep your budget flexible? Treat budgeting like an on-going process, not a one-time activity. Evaluate the terms that you set up to see if they’re working, and then make adjustments. Do this every month. 

Start by tracking your expenses to see whether you’re going over or under the limits that you gave yourself. You can do this by collecting your receipts and logging the totals into a spreadsheet. If you mostly use debit or credit cards, you can look at copies of your online bank statements. Another good way to do this is to download one of the top budgeting apps on your smartphone or computer. Many of these track your expenses in real-time. 

Once you see where your money is going, you can quickly figure out if you’re actually following the guidelines that you set up in your budget and make edits.  

Don’t just make a budget that works on paper. Make one that works for you. Include these things in your budget and watch how easy it is to manage your money.