Manage Your Budget
The biggest problem that people have with budgeting is that it rarely goes according to plan. People see this, get discouraged, and give up altogether. You don’t want this to happen to you. Expect the unexpected, and you won’t have a problem staying on budget. A budget is meant to give you structure to your saving and spending plans, but it is also meant to be fluid. If you don’t know how to do this, pay attention to some of the following tips.
How to Spend Unexpected Income
Many people have the tendency to spend unexpected income however they want. They figure that it’s just free money, and 100% of it should go to your allowance. Don’t be fooled. You should have a plan on what to do with your surplus of income.
Okay, yes, you can add some of it to your allowance. Personally, I splurge a little and give 20% to myself. However, the rest of it should go to savings, debt payoff, or any other necessary expense you might have trouble paying with your current budget.
Remember that unexpected expenses happen as well. Most of your unexpected income should help you prepare for that.
Keep Track of Your Budget Daily
Checking on your budget daily will help you to adjust when needed. If you require some flexibility, this will be a great help to you. It will also help you remember what you should be spending. Sometimes you forget and overspend.
Percentage vs. Deductions
Some of your necessary expenses, like mortgage and utilities, will happen no matter what your income is. However, some of your expenses should be listed as percentages of your income. Savings, allowances, and investments can all be listed as a percentage.
It’s best to calculate this expense as a percentage of your income after your necessary monthly expenses. This will help keep you from going over your budget.