Financial Education

6 tips on how to budget: make the most of your money!

Setting up a budget can be the first step you can take towards the dream or a much more economically healthy standard of living. However, how to set up a budget? Read this article and learn six essential pieces of advice.


Learn how to create a budget that works for you

Economics books, pen, reports and calculator (What is budgeting) (how to budget)
6 must-have tips on how to set up a budget. Source: Pixabay

In fact, there comes a time in life when we feel the need to put together a budget. For some, this need is felt the worst way: after counting too much debt, they worry about figuring out how to put together a budget.

For others, this motivation may appear in a period of healthier personal finances. Regardless of how it happened for you, congratulations.

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After all, you have just made a decision that can influence not only your life but also the next generations of your family. Below are some tips that can make everything a lot easier, so read on!

Why is budgeting essential for your financial health and when should you start?

puppet being controlled strings (money and time)
Who’s in control: you or your money? Source: Pixabay

From my own experience, I can say that those who choose not to learn how to set up a budget will always be counting on luck.

By choosing not to set up a budget, you will never be ready when something goes wrong.

You’ll never know if you’re spending more or less than you could and should. You will always need to put off dreams and financial goals and there is a good chance you will never achieve them.

Finally, you will have to work much longer, as you have not prepared yourself well for retirement. However, I understand why you haven’t come up with a budget until today.

Not having to write down everything you spend and do calculations is a comfort zone. It even gives you a “feeling of freedom”, of being free to spend your money however you want.

So, read our next tips to learn more about budgeting and having a healthy financial life!

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Financial health can be achieved through a simple and free tool: a good and realistic budget. Read this article and learn step by step how to apply this tool in your life!

6 steps to effectively budget your money

You might be scared by how much money you spend on frivolous things and how much it says about your immaturity.

Therefore, many prefer to “close their eyes” to this reality and continue to receive and spend their salary without worrying.

In fact, the money is yours. So you have every right in the world to live like that if you want to. However, be aware that this comes at a price.

My grandmother always told me: “My grandson, money doesn’t accept insults.” Either you learn to treat it, or it will run away from you”.

The problem isn’t exactly money running away from you, but you have to chase it your whole life.

If this story touched you in any way, stay with us in this article. We’ll give you the best advice on how to set up a budget, according to the experts!

Budget for the next month at the end of this month

Do you know the best time to make your budget? Some might say that’s when your paycheck is finally in your account.

However, this is an error. For some, an unplanned salary can be an invitation to random spending. That’s why it’s good that you give your money a destination before it even lands in your account.

That way, the best time to put together next month’s budget is now. In fact, get used to setting up a budget a month in advance.

After a while, this will be a basic routine and you’ll wonder why you didn’t do it sooner.

Make your budget together with your family

family shopping in a supermarket
Your spending plan needs to be a project for everyone in your family. Source: Pixabay

Since you live together with your family members, it is important that you “paddle in the same direction” when it comes to money. Therefore, it is important to include them in the planning of finances.

Everything is easier when the goal, whether it’s paying bills or financing vacations, is everyone’s project.

Start with the most important categories

When you start allocating your money, prioritize the most important spending/investment categories. This means that, first of all, you must allocate a part of your budget to a safety reserve.

Only after making this “self-payment” should you think about other expenses. We recommend that you set aside another part of your money to pay your bills.

The longer it takes you to pay off a debt, the bigger it tends to get. Therefore, it is important to eliminate them as soon as possible.

Then allocate your money to the most important fixed expenses: food, housing, transport, and others. Finally, we recommend that you use a portion of your money to invest in your career or training.

With that percentage, buy books or courses that will help you develop or improve the skills that can earn you more money. Finally, set aside an amount for superfluous expenses.

That’s right! A good budget has time off for you to buy candy during the day or anything less important.

Review your budget each month

As you already know, there are months with special expenses. For example, before winter it’s always good to pay someone to check your roof and heaters.

On the eve of back to school, you will need to buy school supplies for your child. Your car also needs to undergo periodic inspections.

At Christmas, it’s good to set aside some of your money for gifts. That way, understand that your budget should be reviewed and rethought every month.

In fact, this is a very useful mechanism to avoid surprises.

Cut without mercy

When you list all your current expenses, you’ll see that many of them simply shouldn’t exist. In fact, this is just on your spending list, probably for the “pleasure of spending”.

However, now is the time to treat your money rationally and think that you are building something bigger. Hence, it is important that you get rid of this type of expense without regrets.

So, avoid buying products on the internet just because you find it interesting or spending money to impress someone. In fact, you don’t need it.

Identify which are these “drains” where your money drains and close them well.

Be patient with yourself

It is normal to fail to put a budget into practice in the first four months of trying. At times, you may be invited to an event that is out of your budget and meets the pressure.

Also, it may be that the promotion of a useless product will seduce you. Well, that can happen, mainly because you’re trying to build a new habit. So, it’s important that you don’t put everything to waste.

Go back and try again to follow your plan. Before long, you’ll feel that this resilience can make you even better in other areas of life.

Do you know what “financial illiteracy” is? In some cases, this is the main villain that makes many people unable to assemble and hold a plan.

To know and fight it, go to our post below and read this exclusive article!

Financial literacy and education with learning from books tiny person concept. Economic knowledge and personal skills development with reading courses vector illustration.

What is financial literacy (and why everyone should know about it)

Fundamental knowledge to conquer freedom and all your financial dreams. Understand what financial literacy is.

About the author

José Gonçalo

I started reading about finance only to find better options than savings. Since then, I have never stopped studying finance, and I believe that writing about it is the best way to help individuals feel fulfilled and have a healthy financial life. Today, I balance finance and medical school studies.

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