Master Your Budget Strategy in 2020
The New Year has kicked in with new hopes and new resolutions. We all make some promises and set some goals at the beginning of the New Year. Plans to lose weight, maintaining a healthy lifestyle, paying off debts, and saving money are a few milestones that almost every person wants to reach.
Half of the American population wants to become financially stable. Yet, you cannot achieve this target without managing your finances. Many people don’t have any plans or budgeting strategies to keep track of their money.
In addition, the majority of the people don’t have an emergency fund and don’t know how to balance spending and saving. If you don’t want to find yourself in a miserable financial state in 2020, now is the time to learn some tricks to master your budget.
You Need a Budget Plan for 2020
Before exploring the many ways of managing your finances, it is key to understand the importance of budgeting in the first place.
People who spend money without keeping track of their expenses and savings often find themselves in a precarious financial crisis. Budget is a financial plan that helps you keep the money trail. It helps you outline a strategy of how and where you are going to spend your money.
Home ownership is a dream that many Americans live for; they work day and night to turn that dream into reality. Budgeting or managing your finances narrows down the gap to get your dream house. With financial planning, saving up for a down payment becomes easier.
If buying a home is not on your list, there are still many reasons to make a budget plan. Creating a budget helps you:
- Make well-thought-of financial decisions
- Overcome life uncertainties
- Step into the new year with a careful financial plan
- Keep track of your expenses and savings
- Pay off your debts/mortgage
Tips and Tricks to Master Your Budget Strategy
With budgeting, you can manage your finances more systematically. Whether you have a budgeting app or you make a list of financial milestones on paper, follow these tips to master your budget strategy.
1. Set Your Priorities Straight
Do you know that everyday Americans spend only 2.24 minutes on managing finances? Imagine giving less than three minutes to manage money – one of the key forces that make things happen in life.
Define your priorities and make time to keep things on track. Schedule time to check your accounts and track your expenses. It helps you to know your financial net worth, i.e., your current financial position.
Your net worth is a snippet of things you owe and the things you own. It helps you set realistic goals and make better financial decisions.
2. Keep Track of Your Expenses
Calculating your expenses is crucial to mastering your budget plan. Have you ever thought about where your money goes each month? Make a list of your monthly expenses including down payments, mortgage, utility bills, insurance, and loans.
Don’t forget to add variable expenses, such as grocery and mobile bills. Since there is no fixed amount for such expenses, include an average to your monthly budget.
It is impossible to remember how you spent every penny over a month. However, reviewing your bank and credit card statements can help you find out where the money goes.
3. Create Realistic Financial Goals
The next step is to evaluate if you are on the right track. Monthly transactions reflect your spending behavior. Do you have a plan of how you want to invest your money, or are you just spending it? It is important to figure out what you want to achieve.
Set short-term financial goals. For instance, assign an target to save $1000 in the first quarter of 2020. Make sure the targets you set are achievable; they should serve as a path leading you to bigger milestones.
Check your progress to determine whether you are achieving your targets within the set timeframe. If you meet the target, set a new goal. In case you fail, review and cut down some of your additional expenses.
4. Tailor Your Budget to Meet Your Goals
Once you have established your goals, find ways to achieve those targets. Create a detailed financial plan that shows where your money goes and where you want to spend it. Factor your monthly expenses and allocate a specific amount for essentials.
Keep the amount for the mortgage, loans, and utility bills aside, and see what you are left with. Use that money wisely and, if possible, save a portion from miscellaneous expenditures. If you don’t have much left in your pocket, look for opportunities to supplement your monthly income.
You can find thousands of freelance jobs online. Many companies provide work-from-home opportunities. Try to manage your expenses without having to reach for your credit cards.
5. Leverage Automatic Transaction Facilities
Even if you have a budget in place, managing debts, saving for emergency funds, and paying bills can be difficult. No matter how hard you try, dividing the money for different expenses is not easy. That’s where automation comes into play.
You can set up automatic transfers and payments for your expenses. Automating your financial life helps you take care of your essentials. With automatic debits, you don’t have to do the math: the transactions will take place as soon as you receive your paycheck.
Many people tend to forget their resolutions within weeks of entering the New Year. It is important to track your financial progress regularly so you don’t veer off the path. Review your bank statements to know your financial worth. When creating your budget, make sure to keep your goals in mind. Cut down unnecessary expenses and automate your transactions. This way, you can stay in the budget limit and manage your finances smartly.