How to organize your monthly budget

People often connect budgeting with complicated accounting activity that requires a lot of knowledge and time and often makes them feel guilty in the end about spending their money in a certain way. It’s a myth that we’ll debunk right now!
Budgeting on a monthly basis is very important because it will help you feel calm and confident and have complete control over your finances.
Here is how you can easily create and allocate your budget on your own.

Define your financial goals

There are two types of financial goals – short-term and long-term. Short-term goals are focused on how you use your money today, this week, this month. The long-term goals are focused on the distribution of your money for a year or years ahead. Both types of goals are very important and connected to each other. How you save your money today impacts how they grow in the future.

The next step is to determine which goals meet your basic needs and which relate to more luxurious purchases, dreams, or plans for a distant future.
Short-term financial goals typically include monthly utility bills, food expenses and seasonal clothing, children’s expenses, sports fees, monthly loan installments, even pocket money. Long-term goals refer to large purchases such as buying a property, a new car or yacht, making financial investments, deposits, savings accounts, pension funds, and so on.

Calculate your incomes and expenses

Once you have set your financial goals, you must prepare a plan for their implementation. Start by calculating your earnings – salary, fees, bonuses, social benefits, wages, etc. Keeping in mind that most of the revenue and expences are periodic, it is easier to prepare your budget on a monthly basis.
The next step is to calculate the fixed costs (household expenses that are highly predictable) and variable costs – money for food, free time and other. Many people also provide a third group of costs – unexpected costs such as medical bills, special beauty treatments, a visit to the dentist.

Analyze and create your monthly budget

Your ultimate goal is to make sure that the costs do not exceed the incomes. Sort everything in a table, and if this is the case, you need to change some of your habits and give up the „unimportant things.

When you mark your expenses, make sure to include a percentage for your long-term goals and save net. Experts advise to set aside about 20% of your earnings in form of savings for a better future, but if you do not have this opportunity at the moment, you can start with a smaller percentage and slowly increase it in time.
In order not to be tempted to spend your savings, you can put them in a term deposit. TBI Bank offers some of the best conditions for term deposits and savings in the country. Learn more here!

You can also think of creating an emergency fund which can be very useful in financial crisis situations such as accidently losing your job. This fund is а form of separate savings or a bank account from your safe net for long-term goals and it should cover your expenses in a period within 3 to 6 months.

Follow the budget

Setting up a budget is a big step forward in your life and it will help you manage your finances better. The important thing is to be consistent and follow your budget plan even modify it when needed. The truth is in the balance, take control of your finances!