These days it gets tough to come by a person that successfully plans the monthly budget without any difficulties. If you have a salary above $1,500, you can qualify for a payday loan or installment loan, but that’s not always the best step to make. Instead, you could first try to apply monthly budgeting methods to try and cover your expenses with a paycheck.
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In case you still can’t figure out the ways of making a monthly budget after reading this guide, the AdvanceSOS app could help. You can get cash loans with fast approval, while it only takes a few hours for a soft credit check. This won’t affect your credit score, while you can get a cash advance on the next business day, or even within 24 hours!
How To Plan Your Monthly Budget?
When someone mentions the word “budget”, you might instantly think that it surely comes with the ban on spending your money on unnecessary purchases. While you certainly have to make a plan based on your salary, you can still pay both for your needs and wants.
It just requires discipline and careful planning for mastering your finances based on the following few methods:
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Figure out your salary after taxes
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Make a list of your monthly needs
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Put both variable and fixed costs on the paper
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Reduce the expenses that are not vital for your monthly plan
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Write down every payment through the month
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Try using the 50-30-20 rule
Knowing your net income is the first step you need to take towards budget planning, and you should proceed by planning the expenses. Income after tax deduction represents your monthly budget, and the two most important aspects are needs and want.
For instance, you could start using your car only to get to work, while running chores in your living area can be done on foot. This way you will save on fuel, which is, in this case, an unnecessary expense. Make a list of your inevitable expenses first. Once you put all the utility bills, mobile subscriptions, and food expenses on the paper, you will know your remaining monthly budget as a solid start.
Using a 50-30-20 Rule Helps with Planning
The most important budget planning concept is the 50-30-20 rule which states that you should spend 50% of your salary on necessities. However, this expense is not the same for everyone, especially considering your insurance costs and child care.
Fuel, housing, and food also make the crucial aspects of this list, so put it all on paper and roughly estimate your expense. If the total expense doesn’t surpass 50% of your budget, you’ll be on the right track. If you take a payday loan or installment loan by using the AdvanceSOS service, 20% of the formula should be spent on repayments and savings.
Finally, we reach that problematic 30% that could drastically vary depending on your spending habits. About 30% of the leftover income should be spent on wants, but you should make it less than 30% if possible.
If you write everything down, you can see that perhaps you won’t be able to afford to go to the movies or a shopping center once a week. It’s always best to avoid debt and loans if you can, so try to cut down this percentage and increase your budget for needs you can’t avoid.
Keeping Track of Your Expenses is Crucial
As you write down your monthly budget plan, you can keep track of your expenses as the month progresses to see if it fits the plan. Write down the cost of every dime you spend each day, and carefully plan the remaining budget from there.
For instance, if you spend more than you planned to one day, try to deduct that extra cost from the next day’s expenses. Staying loyal to the budget plan will help you master your finances, and you’ll also learn how to behave best with your money.
That 20% for savings and loan repayments we mentioned can always be used as a rainy day fund if you don’t have any current credit.
How To Work With Fixed and Variable Costs?
It can’t be helped that you have to pay the same sum repeatedly every month on utility bills and mobile costs. But, what about the variable costs, and how should you calculate those costs when you don’t even know their amount yet?
The smartest thing to do is to always exaggerate a bit with variable cost calculation. So, if realistically your variable cost for entertainment is $100, write it down in a budget plan as twice as much. This way, you can be prepared for that little bit of extra costs that might show up now and then.
You should also count the installment loan repayment as a fixed cost, and write it down as such in your budget plan. To master your finances, it’s important to always pre-calculate variable expenses realistically, and write them down as even higher amounts to avoid spending your entire budget.
Stick To Your Budget Plan At All Times
Hopefully, this guide can help you a bit when calculating your monthly costs and making a budget plan. The reality is, every one of us sometimes spends a bit more than expected, but you can hedge the expenses by calculating higher variable rates.
Sticking with the plan is crucial, and if you can do so, there’s a good chance that you’ll be able to fit in all of the monthly costs without having to take a loan.