No one has been saved from the havocs of the pandemic since its outbreak. In the U.S the unemployment rate reached 14.8% in April 2021, Thousands of companies are shut down and many people are stuck inside their homes due to city-wide lockdown. During this time, the dire need is to create a proper strategic plan to control and monitor your expenses. You need to have a handful of the amount in your bank account at any given instant as the economic condition is drastically changing.
By making a budget you don’t put restrictions on your freedom; rather, it increases it! It’s all about being deliberate about where your money goes. Instead of biting off your nails, start planning about budgeting so that till New Year Eve you can have a pocket-full of savings. Let’s begin our 14-day plan to better budgeting. Read on!
How to budget – 14 days planning
Day 1: Gather All Your Financial Information
If you’re organizing by account, make sure to put papers in sequential order within each file so it will be easy for you to find later. You may have many accounts to receive your payments, so the first step is to gather all your payments in one place.
Transfer the amount from all of your different accounts or collect your pending payments. In this way, you will get an idea about how much you own. When we get payments on different dates, we fail to keep track of our earnings as well as saving. So, it’s important to know where you stand.
Bills and financial statements should be organized by month or account according to your preference. Hanging files or extending files are frequently the most convenient options.
Day 2: Calculate the Net Income
Knowing how much money you make is the first part of budgeting. Whether you earn money from part-time work or only get a monthly allowance for helping around the house, you should add up your monthly earnings.
Have you ever calculated your net income? On your payslip, you must have seen the gross amount and the net income. The difference between the two is that the Gross income is the total salary paid to you whereas the net income is the amount received in your bank account after tax and other deductions. You need to know your net income to plan your budgeting.
Day 3: Select a System to Track Your Spending
To shrug off the stress of calculating now and then the easy way is to get top budgeting software and apps. YNAB is a budgeting app that offers a complete budget makeover. In just $83 per year, you can have a comprehensive report and assistance to manage your finances.
Coming up next is Intuit Mint, which is the second-best budgeting app. It’s easy, seamless, and efficient to track, manage and plan your expenses. It’s a free budgeting app with several features.
Furthermore, if you want to go for the finance systems you can download Expensify. It’s one of the leading expense management tools to track finances. It generates real-time reports with flawless budgeting.
Day 4: Analyze & Your Debt
Are you in debt? But how much money do you need to pay to set yourself free from debts? Analyzing your debts should be your prime concern. Collect all of your financial records; this should include unopened mail, documents, and bills.
Pending credit cards bill can add up to the total pending payment and likewise, the interest rate to add the final toppings. Therefore, sit down and create a proper sheet inserting all the entries of cards and people to whom you owe some money.
Day 5: Free Up Some Money To Save
Have you ever heard about the snowball effect? Well, it’s a smart way to get a hold of your debts and to free yourself from them. The snowball effect implies starting with the smallest amount. You pay the smallest pending payment and as it gets cleared you add that money to the next debt category. Regardless of what the interest rate is you should first go for clearing with the minimum amount. The more you pay off your debts the more freed-up money you get. It’s similar to how a snowball gets bigger while rolling down the hill.
Day 6: Design the Budget
Now it’s time for you to design your budget. Once you know your real earnings and the debts you have to pay, you now have to move on to analyzing your expenses and designing your budget. Your budget should show how your expenses compare to your income, allowing you to budget and avoid overspending.
The budgeting list starts from the important expenses, which are associated with your needs or the essentials. For instance, paying house rent, insurance fees, college fees, or the grocery budget. After listing down the essentials you move on to the extra expenses which you cannot avoid. You must have a complete record of how much you spend from your income and other earnings.
Even though you should use a budget spreadsheet, by doing this you’ll have a way to keep track of where you spend money each month. Using a template to create a budget might help you feel more in charge of your finances while also allowing you to save money for your goals.
Day 7: Set Practical Goals
Bravo yourself for reaching the seventh day of your budgeting plan. Moving on, it’s time to set practical goals. Remember not to fly off in fantasies and stay on the real grounds when it comes to making targets. You cannot turn yourself into someone you have never been. So, know yourself and your habits of spending, and then make a plan that you can follow most honestly.
Setting practical goals is a fantastic approach to keep yourself motivated to stick to your budget. You’ll attain them in no time if you stick to your budget and follow good saving and spending habits.
Cut those expenses which you do not find important and set a target to save a certain amount every month, no matter how small it is, but you should have your savings.
Try to use coupons and discounts because these are the only benefits for customers. There is an online book store named “Book Depository” that offers amazing deals, coupons, and much more. By using Book Depository coupon codes you can save a lot of money.
Day 8: Examine the Seasonal Goals
There are two types of goals, one that extends to a certain period, let say 6 months, and the other one is that you set for a particular season, it could be till New Year Eve. You need to examine your seasonal goals in terms of the investment plans you have set or the kind of expenses you are about to make. You need to evaluate if it can handle your income and saving ratio or not.
Day 9: Invest Some Money
Investing is also a beneficial part of saving. Investing allows your money to increase more quickly than it could in a savings account. This helps you fight off many troubles that may arrive in the future. It could be to handle inflation or the expected health crises. When it comes to investing money, you must know the most profitable options.
Your returns will increase if you have a long time before you need to reach your target. In simple words, this indicates that, in addition to a better rate of return on investment, your investment earnings will grow over time.
For instance, if you have the proper information about crypto-currencies then it’s a better option to go for. Secondly, you can choose a real estate business, or get some gold in your locker. Whatever industry or field of business you choose, make sure you are well aware of it and that it shows potential growth over time.
Day 10: Find Your Extravagance
People are confused between what they need and what they want. There is a huge difference between the two and the sooner you get it the easier it will be to handle your expenses. You may need a nice dress for the party but falling for an over-priced branded dress may be something you want, which you can avoid if your pocket is small. So, create a list of your extravagance and try to trim it short with time.
RetailMeNot, ClothingRIC, and Groupon are the websites that offer big deals and coupon codes and instruct their readers on how to live frugally, save money, and make wise shopping decisions.
Regularly stocking up on non-perishable basics is a fantastic way to save money. If you notice things you use frequently on sale, purchase more, and stock up your store. This is similar to the habit of not overpaying for convenience, and it illustrates how frugal individuals often plan further for what they’ll need in a month.
Day 11: Do Not Delay Your Dues
The simplest way to lose money is to neglect to pay your credit card bills and to skip minimal payments. This is the one biggest mistake people make is missing out on their due dates. Never make delayed payments. When you delay a certain payment you do not just have to pay that amount later but the interest rate that added up to it creates a lag in your account sheets.
Set up a standing instruction in your bank account or an auto-debit for the total amount owed or the minimum amount owed.
Day 12: Get Your Credit Score
The right credit score should be in three digits and the higher your score is the more opportunities it creates to get a good amount on loans and to unlock other investment opportunities.
If you have a low credit score, the less option you will get a loan. You may have to pay a higher interest rate if you are authorized. If you want to get a credit card, receive a personal or vehicle loan, or apply for a mortgage to buy a home, it’s in your best interest to have the highest possible score. It creates a potential profile to attract lenders or investors.
Day 13: Analyze Your Bank Accounts
With only one bank account, it’s simple to check your balance and keep track of your spending. If you have money in many institutions, keeping track of your balances may be more difficult.
Do not get stuck managing your different bank accounts when you do not even need them. This way you will not get a clue of how much money you own as it stays distributed. Having multiple bank accounts is a mixed bag. Make sure there’s a valid cause for it if you’re taking it that way. So, it’s always better to have not more than two active bank accounts.
Day 14: Check Your Insurance Plans
Have you ever carried an umbrella when you do not need it? Then why pay for such insurance that you may not need ever. Budgets are always being analyzed by business owners, who are seeking ways to save money. Workers’ compensation injuries are widespread in particular occupations, and insurance can be costly.
Construction business insurance is more expensive than accounting office insurance. Check your insurance plans and keep those which are important like the health and car insurance ones.
Budgeters set themselves up to get out of debt faster, reach their financial goals more quickly, and spend wisely. The best part is that effective budgeting habits may be implemented with only a few simple changes to your money routine.
Sticking to the plan will help you get the most out of your money and offer you peace of mind that every dollar in your bank account is being put to good use. A successful budgeting plan only works if you stay consistent and honest with it. Consider evaluating your budgets every month or if you are not that dedicated to following then a weekly glimpse would be great.