We all need money. We work hard for it. We endure sleepless nights for it. Sometimes, some of us even steal for it.
But money, once in our hands, tends to vanish before we can even blink twice. Pay the bills here. Buy groceries there. Set some money aside for tuition. And the list of expenses can go on and on.
But is it going to be just like that; we work just to earn the money that we use to pay our dues and there would be nothing left for us? Well, this is not going to be the case if we know how to budget. In this article, we are going to outline the four big line items that must be in every budget plan so that the earner can afford the financial freedom that they so yearn for.
Of course, your budget will never be complete without that large cut for the necessities of life such as groceries and the rent for the place that you are living in. Because of their importance, these items should always get the first cut of your disposable income.
However, bear in mind that these should never take all of your money. Together, they should take no more than 60% of your income pie. If they exceed that, maybe there’s a need for you to adjust your expenses or move to a more affordable place.
Fun and Entertainment
For sure, other budget counselors and advisors would put this line item at the bottom of the list. But we won’t do that here. Everyone wants to be rewarded for their hard work, and there’s no other way to do that than to let them enjoy a portion of their hard-earned cash. Even the most efficient and dependable San Antonio insurance claims lawyer who help those who are involved in accidents or the most famous property manager in Maryland wouldn’t shine as much in their roles if they are not given the freedom to somehow enjoy the money that they earn. Playing is never wrong, as long as it is within the right limits. With this said, the budget for fun and entertainment should never go beyond 15% of your income.
Your budget for growth should be around 10-15%, and it will be used for bettering yourself. Self-improvement is essential especially if you have a career that involves information technology and other fast-changing elements. Even if you do not have plans to study during that particular pay cycle, you should still allot a fixed percentage of your income for this purpose. The amount that you raise could very well be used for much grander purposes such as taking short courses or even earning a degree.
Improving yourself and your skill set is needed if you want to increase your salary together with your position in your company.
The money that you earn through your job shouldn’t just be something that diminishes. Whenever you can, invest a portion of it into something that makes it grow, such as a business or a rental property. That way, you will be able to get passive income to augment the amount that you regularly receive. The amount that you put in as investment should not be less than 10% but no more than 15%.
Budgeting shouldn’t be complicated. All you have to do is know what should be in the budget, and then make sure that you don’t go over the allotted amount.