Manage Expenses Using simple Budgeting Guidelines
Exploring ideas on how to manage expenses? Some simple guidelines can help on your journey to financial health.
It is helpful to look at simple budgeting guidelines to see if they will work for you and your household.
The Place to Start
To get the process going, many people find it useful to track daily expenses for one month. Many of the people we speak with have told us that it was worth their time to keep tabs on monthly expenses because of what they uncovered.
Tracking expenses doesn't have to be complicated - it can simply be a hand-written notebook organized into three columns that track expenses by date, total spent, and type of expense.
If you choose to track your expenses using a small notebook, make it easy by keeping it in a purse or wallet, or storing it in a handy place along with a pen or pencil.
Another tracking technique involves saving receipts from your purchases and documenting that information in a notebook or on your smartphone or computer later.
Once you have your list of expenses for an entire month, it is then helpful to group certain expenses together.
Some credit cards automatically tag your purchases in categories like department store or automotive. This can make the grouping process a lot easier!
Group the expenses into categories that make sense for you – such as housing, transportation, food, medicine, debt payments, savings or other categories.
Get Started with Simple Budgeting Guidelines
Now that you tracked your daily expenses for an entire month, and have grouped those expenses into categories, the next step is all about trying out some budgeting guidelines to see if they make sense for you.
See the following monthly expenses by category, along with some suggested simple budgeting guidelines to use when allocating your expenses to monthly income:
- Housing Expenses: A good rule of thumb is to allocate 25 to 35% of your monthly income to fixed housing costs. These are the costs that stay the same month after month, such as your rent or mortgage and other housing costs like insurance or property taxes. Housing is generally the average person’s greatest monthly expense.
- Food/Variable Purchases: Many find it useful to spend around 20% of your monthly income on variable costs like food. Variable costs change from month to month, and might also include entertainment and clothing.
- Consumer Debt Payments: A good rule of thumb is to use about 10 – 20% of monthly income to make monthly consumer debt payments.
- Savings, Other Goals: Reserve about 10% of monthly income for savings, to help build an emergency fund. Then apply the remaining income to save for other goals.
Again, these are budgeting guidelines you might want to consider. Each person’s financial situation is unique.
You can always adjust these percentages to accommodate your circumstances.
Following these simple budgeting guidelines might work for you. Explore these suggestions in more detail with this useful budget worksheet.
To explore other options, consider a free consultation from someone who has your interests at heart
Our NFCC-certified counselors help you begin a conversation about where you are today, and what you need to accomplish your goals.
We guide you through a process to assess your financial situation, understand your goals, and create an action plan to work toward them.
We listen with respect, offer advice and information that could help you meet your needs.
Request a call from a GreenPath counselor today!
BY: GREENPATH FINANCIAL WELLNESS