Use These Secret Tricks to Create a Foolproof Budget

December 01, 2017
You may have been frustrated by past attempts to create a budget. These financial planning failures are usually due to one of two things: not including something important in your budget or not accounting for unexpected, non-regular expenses.
Use These Secret Tricks to Create a Foolproof Budget

Here are some expenses that people often overlook when creating a budget. Include them in your plans so that you can avoid any financial setbacks and reach your goals. 

  • Debt payments. Yes, you will have to make the minimum payment on your loans and credit cards each month. Doing this will save you from having to pay late fees or being hit with an interest rate increase. If possible, you should put extra money into your debt payments each month. The more you pay, the less interest you will have to pay over the life of your loan or credit card debt. If you are close to paying off your credit card, consider getting an online personal loan to pay off the remaining balance. This loan, which you can obtain easily with a bank statement and pay stub, will be paid back in installments, so it will be easy to manage compared to credit card payments.
  • Emergency savings. You should save at least a little bit of money each month for emergency expenses such as repairs or unexpected purchases. Ideally, you will have one month worth of income saved for such emergencies. This is not always possible, but if you make this category a part of your budget, you will surpass this goal eventually.
  • Entertainment spending. Rather than just having a strategy of “spending whatever is left over” each month on entertainment, you should set aside a specific amount each month for fun. This money could be used for going out for drinks with friends, going to a restaurant or getting tickets to a movie or concert. You can also include movie subscription services in this category. Why do this? First of all, fun is important, so you should save some of your hard-earned money so that you can enjoy your life. Second, you could easily overspend in this category if you do not have a plan.
  • Investing/wealth building. This is a confusing category for some people. You could use the money to create some sort of retirement account OR you could put it in an investment fund or an interest-bearing savings account. You do not have to save a large amount, but you must be consistent, and you must not touch the money that you save for any reason. If you can save month after month, you will eventually build wealth.
  • Non-necessities. It is important to differentiate between necessities and non-necessities. Obviously, you will need food, shelter, and other basics in order to live. However, anything beyond this should be considered non-necessary. If you separate your budget into these two groupings, you will be able to easily decide where you can lower your spending. For example, you may decide that things like coffee from a cafe, cable TV, and new apparel fall into the non-necessity category. You do not have to give these unnecessary things up, but you can find ways to lower your spending in these areas.