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How to Create and Stick to Your Budget

Budgeting is incredibly important even though it can be a somewhat mundane task. After all, very few people get up on a Saturday morning excited to figure out their budgets with a few spreadsheets. With that said, it’s critical to set up and follow a budget. Not only should you budget for big purchases, but you should maintain one so you always have emergency funds for surprise expenses and your retirement

Budgeting and being smart with your money are easier said than done. Going out to eat, buying those Doc Martens you’ve had your eye on, and getting a subscription to your favorite fitness workouts might seem like “needs” but…they’re not actually necessary. 

Below, we’ll go into how to create and follow a budget without giving up everything you love.

Step 1: Put money into your savings
If you live paycheck to paycheck, you might wonder how to actually divert some of your income into your savings in the first place. Well, every pay period, try to put some money into your savings account. If you can even spare $50 each paycheck, that can add up to quite a bit by the end of the year.

Keep your savings in a high-yield savings account so that the money you keep in the bank actually grows over time. Many high-yield savings accounts limit the amount of times you can withdraw money, so you’ll have a better chance at actually keeping your savings intact. 

Follow the 50/30/20 budgeting rule as a basic rule-of-thumb:
Put 50 percent of each paycheck toward fixed expenses you need to pay like loans, rent, utilities, and insurance. 
Put 30 percent of your paycheck toward your hobbies and discretionary spending.
Put 20 percent of each paycheck into your savings account.

Step 2: Invest some of your money
If you have a little bit of money sitting in your banking account that isn’t growing much, you may want to consider putting some of it in investments like stocks and the crypto markets. Investing is a good way to diversify your income. You may want to get help from a professional broker dealer network to get the best advice regarding your investment approach. You may also seek recommendations from an accredited investor on how to access great investment options. After all, not everyone is an investment expert and it can be difficult to make those kinds of financial decisions on your own. There is also a wealth of information available online if you want to learn how to start investing.

Step 3: Compare your income and expenses
If you really want to practice budgeting and start from scratch, write out every expense you have in comparison to your adjusted gross income (post taxes). You’ll quickly realize that you don’t have as much money as you think you have. Numbers don’t lie and keeping tabs on your income compared to your spending can keep your discretionary expenses in check. Using a paycheck calculator for Illinois, or wherever you are based, can be useful at this stage, to calculate your precise take-home pay therefore helping you to budget more efficiently. Don't forget to budget for medical expenses. There will always be unexpected things that will pop up, however, typical expenses that stem from visits to dentists and primary care doctors should be worked into your annual budget. If you're between practices, you should call around to see where you might be able to be seen. A great option for Colorado residents is Powers Dental Group.

Step 4: Pay attention to recurring subscriptions
It’s extremely easy to forget about all of your recurring subscriptions. Consider getting rid of subscriptions and recurring monthly charges. For example, do you actually use the gym? Can you start walking or running around your neighborhood instead to save on that expense? 
If you aren’t sure what subscriptions are active, there are plenty of apps that will figure that out for you. 

Step 5: Consider using an app to track your spending
When you’re not regularly reviewing your transactions on your credit cards and debit cards, it can be easy to stop tracking how much money is going right out the door. However, an easy way to stay accountable is to use a budgeting app, such as Truebill. Check out this truebill review for more information. You can often set up customized budgets and get an alert when your spending goes past the thresholds you’ve set. 

Takeaways: Budgeting 101
Sure, budgeting isn’t always fun – who wants to restrict their spending when Amazon exists? But, by keeping tabs on your income and expenses, you can feel more empowered and save up for things that you actually want. Plus, creating a budget with a robust savings account means that you can have peace-of-mind, even when the worst-care-scenario happens and you lose your job or you have a medical emergency. Budgeting takes time and effort, but with one in place, you can create a strong financial foundation that will deliver freedom and confidence that you can handle anything that comes your way.

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