Are you struggling to save money? Or are you wondering where all your salary disappeared? Or maybe you’ve tried several budgeting techniques but struggled to stick with it? Or, you just want to get better at managing your money!
This is a fool-proof strategy that’s been used for years to manage money. No math, no spreadsheets, just a simple technique that will definitely work if you are willing to put an hour into it.
STEP 1: Budgeting
First and foremost, break down your monthly income into three categories:
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💰Budgeting 101 (swipe left): Some myths on Budgeting: 👉🏽 Budgeting is for misers and cheapskates. 👉🏽 Budgeting means I can’t enjoy my life. 👉🏽 Budgeting is time consuming. 👉🏽 Budgeting is a lot of math. I am no good at Math! No No No!!🙅🏽♀️🙅🏽♀️ None of the above are true. Budgeting doesn’t mean you can’t enjoy in life. Instead, it helps you prioritise your spending on what you enjoy the most. It refrains you from spending mindlessly on things you might not need. You don't need to be an A grade student to do budgeting but a simple calculator will do the job! And, you would need only an hour(out of the 720 hours) in a month to set up your budget for the following month. You could also spend another 10 mins per week to check if you are on track with your budget. What’s your biggest budgeting struggle ? What’s one thing you can do to change your budgeting mindset?? ❤️ LIKE this post ↗️ SHARE this post to your favorite ones 📝 COMMENT! I want to hear from you! #budgeting101 #personalfinance
Regardless of whether you plan to save for life insurance or IRAs, the more you save the better! Remember that you need financial stability in order to survive both in your later stage of life and in the present time. The former has already been talked about, the latter, however, is something people might not consider. For instance, now that you are earning in the present time, you might have desires to buy a new house and relocate. However, if you do not have the necessary funds, then you might neither be able to purchase a dwelling nor be able to afford the services of friendly local removalists for the relocation. So, it is prudent that you start saving not only to enjoy a good life after retirement but to afford an exemplary lifestyle while you are earning.
Anyway, now that you know why you need to start saving now, calculate how much you spend and how much you save. If you don’t think your expenses can fit into the 50/30/30 Budgeting Rule, create something more realistic, but as close to the % as possible. Once this is sorted, you’ve pretty much done a fair amount of the groundwork. If you’re looking to stretch your budget somewhat, you may be interested in gaining a passive income in the form of crypto investments. These can top up your funds for travel, luxury purchases, emergency expenditures, or anything you wish.
STEP 2: Bank Accounts
Now, open 5 different bank accounts (yes, 5!!!!) which could be a combination of 2 current and 3 savings accounts with 2-3 banks. Ideally, you would want them to be zero balance accounts so that you don’t end up paying for not maintaining a minimum balance. These accounts are:
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💰 𝗘𝗔𝗦𝗬 𝗛𝗔𝗖𝗞 𝗧𝗢 𝗦𝗔𝗩𝗘 𝗠𝗢𝗡𝗘𝗬 💰 This is the 𝗛𝗢𝗟𝗬 𝗚𝗥𝗔𝗜𝗟 I swear by for my budgeting!!!! Set up an account for different GOALS and set it to auto debit mode. Thus, you never to have to repeat the task of moving your money every month. Personally, I only check in on my needs and wants account often. ✨ This gives me the ability to spend on things I love but at the same time keep myself accountable for my expenses. 𝗣𝗦: 𝗬𝗼𝘂 𝗰𝗮𝗻 𝗲𝗮𝘀𝗶𝗹𝘆 𝗼𝗽𝗲𝗻 𝗮 𝗯𝗮𝗻𝗸 𝗮𝗰𝗰𝗼𝘂𝗻𝘁 𝘄𝗶𝘁𝗵 𝘇𝗲𝗿𝗼 𝗯𝗮𝗹𝗮𝗻𝗰𝗲 𝗶𝗻 𝗺𝗼𝘀𝘁 𝗼𝗳 𝘁𝗵𝗲 𝗰𝗼𝘂𝗻𝘁𝗿𝗶𝗲𝘀. 𝗜𝗻 𝗰𝗼𝘂𝗻𝘁𝗿𝗶𝗲𝘀 𝗹𝗶𝗸𝗲 𝗜𝗻𝗱𝗶𝗮, 𝘆𝗼𝘂 𝗰𝗼𝘂𝗹𝗱 𝗲𝘅𝗽𝗹𝗼𝗿𝗲 𝗮𝗽𝗽𝘀 𝘀𝘂𝗰𝗵 𝗮𝘀 𝗣𝗔𝗬𝗧𝗠. Are you going to try this ? 😁 ❤️ LIKE this post ↗️ SHARE this post to your favorite ones 📝 COMMENT! I want to hear from you! #budgeting101 #personalfinance #easyhack
1. ‘Needs’ Account
This is the account which you will use to pay off your monthly needs. Since the needs for a month are more or less constant, this will have a fixed amount of money in it every month.
2. ‘Wants’ Account
As the name suggests, this account will have money to meet your expenses to get your nails done, eat out and all other expenses which are categorized as ‘wants’.
3. ‘Savings’ Account for Emergency Fund
I cannot STRESSS ENOUGHHH the importance of having an emergency fund. An emergency fund is essentially a pot of money kept aside to meet your expenses during an unforeseen circumstance. Ideally, you should aim to build an emergency fund of at least 6 months’ worth of your expenses.
4. ‘Savings’ Account for Short Term Goals
Want to buy a new phone? Or maybe, go on a holiday? Use this account to save up little by little each month so that you can spend later, guilt and credit-card free!
5. ‘Savings’ Account for Long Term Goals
This is your account to save for those long-term goals in life such as retirement. It’s okay to start small but start early!
STEP 3: Auto Debit
Now, all you have to do is set up an auto-debit of the required amount from your salary account to these 5 accounts! It is best to set the auto-debit date the same as the salary date. Voila, your budgeting is now AUTOMATED!
Why does this work?
This is a foolproof method that ACTUALLY WORKS!
- Because you have organized your money into different categories, it is easier to track your spending. It also saves you from the cumbersome task of detailed budgeting every month.
- Most importantly, your brain starts to see only the money in your spending accounts (i.e. ‘Needs’ and ‘Wants’ account) instead of your salary amount. Consequently, it starts to adapt to live within that amount instead of your complete salary
To learn more about personal finance, budgeting and long-term investing, follow @financewithraji on Instagram.