Tips on Budgeting
How budget depends on your life situation.
A single person will have different goals and expenses than someone who is married with three kids.
So before I give you tips on Budgeting and how they depends on your life situation,
Let us look at what what is budgeting and few challenges affecting budgeting.
What is budgeting
A budget is a financial plan for a define period often one year.
It may include planned skills volume and revenue, resource quantities,
cost and expenses, assist liabilities and cash flow.
The purpose of budgeting are for resource allocation, planning, coordination, motivation and control.
Budgeting also an important tool for decision making,
monitoring business performance and forecasting income and expenditure.
There are a number of serious problems associated with budgeting.
Which include gamesmanship, excessive time required to create a budget, and budgeting accuracy.
In more details the budget challenge includes.
Tips on Budgeting | The 3 Life Scenario
Well I will cover three scenarios on how budgeting depends on your life situations which are:
Many people think singles have the most financial freedom.
That seems to be true. But they must also carry the most responsibility when it comes to budgeting.
The budget is and busted by them alone.
It is up to the individual to set goals in money and life then take the steps to accomplish them.
If you are single, the best thing to do after making your budget is to set long-term money goals based on what is important to you.
For example: Do you own a home, or do you hope to at some point?
How much money do you want to save before you retire?
Take some time to think about these things.
Once your goals (including your retirement numbers) are in place, take a look at where you are in the Baby Steps
After that work your debt snowball until you pay everything off.
Once you do that focus your money on building your starter emergency funds to these to six months of expenses.
Once you have that strong financial foundation under you, you can then focus on your long term goals.
If you want to own a home, now is the time to start piling up money for a good down payment at least %10 but preferable %20.
Since you are also at Baby Step 4, decide how much money you want to save before you can retire then figure out how much you will need to invest each month to achieve that goal after you have saved up your down payment on a house.
If you are young, single and debt-free, you can put away some serious cash and retire long before you ever imagined.
You can also check out how to create a side hustle online that will help you pay up some debts.
You can do some fun stuff with your money as well, like take a vacation or give to your favourite charity.
You can prepare for other life events such as getting married.
Remember, you need to give your money a plan or it will be gone and you won’t have anything to show for it but some take-out menus and a bunch of expensive junk.
However, Living a frugal lifestyle will also help in building up healthy budgets and save for retirement.
Do not combine your money until you are married.
You will have plenty of time to budget together after the wedding.
But until the vows have been exchanged don’t mix the money.
Because if something goes wrong, you have got a big mess if the other person gets mad enough to break off the relationship,
they could close the joint checking account and take your money.
That leaves you with a lot of anger and no way to get the cash back.
Instead, prepare yourselves for the relationship by getting some good premarital counselling that includes a discussion about money.
The sooner you learn how your spouse behaves with money and what is important to them, the more prepared you will be once you get married.
Remember you will be working as a team.
When you make the budget together, you promise to not spend any money except what is been agreed on.
If you do otherwise, you have broken your word, and it will hurt your spouse.
Talk to each other agrees on what you want, and compromise where you need.
3. Married with kids
Believe it or not, having children does not need to blow your budget out of the water.
Many people think you have to spoil the kids or they will complain to a therapist someday.
But if you shop intelligently, you can meet all of their needs (not wants).
And they can still have a wonderful childhood.
Save money by buying consignment clothes, clipping coupons,
taking advantage of tax-free holidays, and not going overboard with birthdays and Christmas gifts.
If you are expecting your first child and want one parent to stay home with the child,
work up a mock budget to determine if that is a doable goal.
Until the baby comes along try to live off that income of the spouse who will work while saving 100% of the other person’s income.
If you can make the number work, then your family is ready to have a stay at home parent.
Creating a mock budget can also show how much you will need to scale back on your life style.
It can help you identify sore spots in your budgets to eliminate while you can.
For example. If you can pay a car off in 18 months on two salaries but not on one,
you will need to sell the car and accelerate your snowball.
If you go back to work after the child is born,
be ready to add child care into the budget.
Unless you have a nearby relative who is willing to watch your child for free, you will have to pay.
Before you decide to have a family, check around for the costs of day care.
Also think of other expenses you have not had to budget yet, like formula, diapers, and babysitting.
Adding up those costs will help you know when you are financially prepared to start a family.
No matter if you are married or single, if you have kids or you do not have kids, the danger of a busted budget is always there.