By creating a budget, you are beginning to make a difference in your finances. As you budget, your plans will change, sometimes daily, other times monthly, but they will change. You can prepare for financial success by understanding the Success Cycle and that it takes time to come up with a budget that fits your exact needs and matches your actions to your goals. The Success Cycle includes these steps:
Your monthly plan should include a summary of the income you receive and a detailed plan of expenses.
The only way to benefit from tracking your spending is to track every transaction. Tracking each time you spend money can seem overwhelming, but with Mvelopes you can set aside a few minutes each day to go through your prior transactions and see your updated envelope balances, so you’re up to date with your spending and how you’re doing with regard to your budget.
Comparing your actual results to your plan is a crucial step. By comparing what you planned for and what you actually spent you can see where you need to make adjustments.
By planning, tracking and comparing you can see the areas where you can decrease your budget or where you need to increase your budget. Adjustments should involve both income and expenses. Adjusting each time you complete the cycle helps tailor your plan to your life and your experience.
Aligning your budget along the 10-10-80 principle helps to set financial goals and make your budget about accomplishing something more than simply not spending more than you earn. The 10-10-80 principle suggests you reserve 10 percent of your income for saving or investing, 10 percent for giving or donations and the final 80 percent can be used for regular and periodic expenses.
In order to establish an emergency fund and months of salary for a safety net, setting aside money for savings needs to happen before you spend money each month. By taking 10 percent and saving it, at first, for your emergency needs and then for your financial goals you can step above living paycheck to paycheck and live on savings that continue to grow as you keep to your budgets.
Finding a purpose for your money outside of your life can be a blessing in viewing your budget as a tool rather than as a drag or as something confining. Giving of your money, whether that is spending on someone else or donating it to your favorite charity can be fulfilling on many levels.
By limiting expenditures to 80 percent of your income, you can correctly budget for your expenses and can see where you are spending too much on a regular basis. By adjusting your expenses to meet that 80 percent threshold, you will be prioritizing living within your means.
Keeping a budget can seem a daunting task, but there are simple things that need done on a daily, weekly, monthly and yearly basis. Checking in regularly with your budget can make sure you’re on track and that you’re accomplishing what you hoped you would.
On a daily basis, look over your transactions and assign them to the categories where they belong. Make sure and look for categories where money is getting tight so you’re aware of what choices you might have to make before you replace funds in your envelope with your new money.
Each time you get paid, make sure and look at your envelopes and put into savings the money that is left over. If you have managed to save a month’s income ahead of time, you can fund your budget every month and stick your paychecks directly into saving and the other accounts you use.
By looking over the past month or three months you can get a pretty good picture of what you’re actually spending your money on. Adjusting your budget or trying to cut your spending to match your budget help to keep you on track with your spending so you can accomplish your financial goals.
On a regular basis, look at what debts you still have outstanding. See where your money is going when you save and invest, what your plan is for retirement and make any necessary changes to your budget to help facilitate those goals.
Plan for future costs, like saving for a child’s college education or medical expenses, so you’re financially prepared for any pending expenses.