Using a budget planner can help make your future more secure. It can help save and even amass financials even on tight budget. All you have to do is to to pay yourself first. In other words, you should direct a certain percentage of money to investments and your saving account. IT can be 10 or 20 percent, but should be a regular investment, which you should pay yourself and forget. The following post can teach you how to manage money effectively with a budget planner even on a tight budget.

1. How a Budget Planner Can Help You

Creating a budget planner suitable for you or using the one attached below can help you achieve the following:

• Overcome financial anxiety: First of all, people who are always on a tight budget experience financial anxiety because if they receive less income next month, they will not be able to cover the basic needs.
• Manage lifestyle creep or inflation: Tracking your expenses can help you keep the same perception of wealth and avoid falling victim of lifestyle creep, whereby you spend more with earning more. As a result, you can stop overspending.
• Determine your financial goals: Following a budget plan, it is possible to amass wealth in the long-term through investments and plan your short-term expenses.

Find the PDF form that can be filled to create your personal budget plan below.

2. Steps How to Manage Money Effectively with a Budget Planner

The first step is to use a budget planner that suit you. It may be:

• A paper budget
• The PDF form above
• The form that you can fill below
• Excel spreadsheets

Start with the form below to have a general picture of your budget:

When You Determine All Sources of Your Income

When you are aware of all your sources of income, starting from salary from your active income to return on investment or dividends, can help you set realistic short- and long-term goals.

Learn how to set SMART goals to address lifestyle creep and financial anxiety.

Believe in your ability to budget with irregular income.

When You Identify All Your Expenses

When you are aware of all your expenses, you will be able to prioritize those that are a must or FIXED (debt, rent) and VARIABLE (food, utilities, transport) and reconsider expenses on your wants (PERIODIC or DISCRETIONARY like hobbies or restaurants).

Calculate the amount of investments and savings in cash or on your saving account.

Always aim to save 10% for your emergency fund to have money for 6 months in case of the absence of income.

When You Clearly Define Financial Goals

When your financial goals are specific, you can set more realistic financial expectations for specific periods.

• In case you have debt, determine specific monthly payments to pay it as son as possible.
• Start investing specific amounts of money in percentage each month after you pay off your debt.
• Determine short-term goals for expenses during the upcoming month and long-term plans for a year, 5 years, and 10 years (income and expenses).
• Long-term planning should cover your retirement (think of it as a small percentage of investment in stocks or funds for a long term).

When You Create a Proper Budget

The United Nations Federal Credit Union ([UNFCU], n.d.) offers a great strategy to allocate money to fixed and variable expenses (50%). It calls this category needs. These are food, transport, housing, debt, etc.

30% should be directed to wants or discretionary expenses. These are hobbies, restaurants, and subscriptions. You can also include expenses on education, courses, and training here.

20% should be “Pay Yourself First” expenses, which are money for the emergency fund, investment, and retirement.

Always change these percents to fit your needs.

3. Tips How to Use a Budget Planner

At first it may be difficult to save or invest money when you are on a tight budget. However, it is important to work on changing your perception of financials and adjust your spending:

• Pay yourself first each month: if is difficult, set a lower percentage of monthly investment, but remember that it should be regular.
• Automate monthly savings and use tools like a budget planner above or Excel: you can decide on changing settings in your bank account to automated transfers to a saving account;
• Avoid perfectionism: sometimes, perfectionism can be the worst enemy to action: try to perceive budgeting as an opportunity instead of a rigid schedule. Perfectionism is a de-motivator, so it is OK to overspend occasionally.

Key Takeaways

Remember that learning how to manage money effectively with a budget plan should serve the purpose of helping you overcome financial anxiety instead of becoming a stressful habit. Thus, avoid perfectionism, stay consistent, and enjoy the habit of regular monthly investment.

Start with small but regular savings for a brighter future.

Reference

United Nations Federal Credit Union. (n.d.). Budgeting basics: The 50-30-20 rule. https://www.unfcu.org/financial-wellness/50-30-20-rule/