Budgeting: Balancing Your Financial Life
Budgeting is a deliberate effort to maintain or attain financial stability. Budgeting allows you to prioritize/keep track of your spending patterns and provides a road map to achieving financial freedom. The spending plan that you develop is the budget, which outlines financial decisions beforehand. It can be created on a weekly, monthly or annual basis; whichever suits you best. Budgeting may seem challenging, but it is a fundamental financial skill everyone should have. Here are 5 tips that can help when designing a budget.
SET FINANCIAL GOALS
Prior to putting a budget together, you need to establish what you want to achieve financially; for example, buying a house, paying off debt, or making investments. Your goals will be your guide for developing strategic spending plans and how to achieve them. Essentially, your goals are your “why” for creating a budget initially.
At Regions Financial Services we provide financial consultation at no cost. This is a service that can help you with developing and setting your financial goals.
DEVELOP A REALISTIC BUDGET
Your budget needs to be reasonable, so it can be easily executed. Calculate your income and expenses to see how you can formulate a suitable budget. First, identify and write down all your expenses over the last 30 days. If there are unnecessary categories or spending amounts in your budget that will cause a setback, you may have to scale down or eliminate them. For example, if you eat out a lot or if half of your monthly income is dedicated to one category, you may consider trimming it so that other categories can have sufficient funds. Budget cuts are hard but necessary, and you can always make adjustments along the way.
A Personal Loan from Regions Financial Services may be very helpful in achieving your financial goals. A personal loan compared to credit cards has a definitive end date which makes it much more predictable when this debt will be eliminated.
One of the most effective ways to achieve your financial goals is to SAVE. The less you spend, the more you save. It is more effective to save first than to save what is left at the end of your budget. An effective way to achieve this is to open a savings account with an automatic savings plan at a financial institution. You should consider saving as a regular expense in your budget, like paying bills, so it becomes a habit.
BEGIN WITH THE MOST IMPORTANT CATEGORIES
We all have certain expenses that cannot be avoided, such as utilities, groceries and rent/mortgage. Categorize these items at the top of your budget to ensure that they are taken care of. Also, if you have loan payments to make, prioritize those payments to avoid the impact of late fees and penalties. Subsequently, other categories can be added according to your needs.
We all do cash withdrawal at the ATM, however, it is very important that we check our balance and consider any debt payment that may be automated to ensure there are sufficient funds to cover those payments.
Developing a budget is relatively the easiest part of controlling your finances; sticking to it can be difficult. Do a budget-to-actual comparison at the end of each period. This involves looking at your spending for the last 30 days and comparing it to what you budgeted for. Evaluate it often and do not be afraid to adjust it where necessary as life can be unpredictable. This strategy allows you to correct inconsistencies immediately, so you can stay on track financially. It can be emotionally draining to stick to your budget, but the reward comes as you achieve your established goals.
Budgeting will save you the financial and emotional distress of overspending or being in debt. Budgeting is a financial life plan with the goal of financial independence in the end.
At Regions Financial Services our clients are our partners. Our goal is to provide the necessary resources and tools to help you become financially independent, and our specially tailored loans and financial consultation are two of the many ways in which we try to accomplish that.
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