4 Ways to Budget Better This Year
It’s never a bad time to build a budget. When you revisit your financial strategy, or just start developing one, you are giving yourself opportunity to maximize your current income and grow your wealth. Whether you’ve been pinching pennies for years or just started saving recently, these four tips can help you become better at saving money and making the most of each paycheck.
Set a Goal Each Month
If you plan your budget every 30 days, you’ll be more likely to stick with whatever rules you set for yourself. This could be saving at least 10% of your paycheck, spending less on groceries, or just cutting out unnecessary spending. If you’re interested in investing, try factoring your investment strategy into your monthly budget, then track your progress. At the end of the month, you can review your portfolio and consider adjusting. No matter what your current budget is, having a monthly goal helps you stay motivated to save. It can also help clarify any wasteful expenses that are secretly draining your reserves.
Deduct Your Essential Costs Upfront
Before you even think about distributing your budget, make sure you subtract mandatory costs. These are non-negotiable expenses you’ll always have, like your rent, mortgage, or car insurance. Once you subtract these from your monthly income, you can start playing around with different ways to save whatever you have left. If you’re living on a smaller budget, then it’s even more important to ensure your essential costs are always accounted for first. Once you know what you must pay, you can start thinking about what you’d like to do with your discretionary income. You may decide to invest it, save it, or use it for personal purchases. To go even further with your budgeting, you can split whatever money you have left over and commit yourself to putting half away.
Think About Student Loan Refinancing
Your student loans may be around for a while. To make them easier to manage, you might consider refinancing them. This process involves taking out a large private loan, paying off all your existing student loans, and solely focusing your efforts on paying down the single lump sum debt. Refinanced student loans can help lower your monthly payment, lower your interest rates, and make it easier to get out of debt faster. What’s more, you don’t even need to have perfect credit to be considered a candidate for refinancing. To find out if this strategy is the right call for your budget, read online about the pros and cons of refinancing student loans to help with your decision.
Separate Your Short-term and Long-term Savings Goals
Distinguishing your savings goals can help you improve your saving habits and make it easier to feel accomplished by your progress. Long-term goals might be getting three months’ worth of rent or mortgage payments into the bank, but a short-term goal could be saving up for a loved one’s birthday gift or going on vacation. Likewise, short-term savings can also be applied toward bills with payment plans. If you focus your efforts on paying off debts quickly, you can free up more room in your budget to finance your long-term goals.
