what is the best way to budget monthly?
There is no ‘best’ way to budget – it's entirely dependent on your own circumstances and what your individual goals are.
However, there are a few different approaches to budgeting. Take a look below.
reverse budgeting
Reverse budgeting focuses on saving towards your financial goals first. When you create a reverse budget, you prioritise putting money into savings. Once you meet your savings goals, you use what’s leftover for expenses and spending. The best way to set a reverse budget is as follows:
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prioritise your financial goals. When you get paid allocate money to your financial goals. This could be savings, paying off debt, or building an emergency fund.
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cover your needs. Next, you pay all your essentials like rent or mortgage payments, bills, food and other necessities.
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enjoy the rest. Any money you have left can be spent on the things you enjoy.
Reverse budgeting works well for those with the financial freedom to prioritise financial goals over other expenses. However, if your monthly necessities already take up a large portion of your income, this might not be for you.
50 20 30 budget rule
The 50/30/20 budget rule is one of the most commonly used. It dictates that you should use 50% of your income on essentials, 30% on items you want, and 20% for savings.
While this ratio is commonly used, you can adjust the ratios to create a budget that suits your personal goals.
50% for essentials
this is your rent/mortgage, food shopping, utilities and other necessary expenses.
30% for non-essentials
this is for the things you want to buy but aren’t essential. For example, new clothes or going out to eat.
20% for savings and debt
this is for getting yourself out of debt as soon as possible and increasing your personal savings.
how do I create a budget planner spreadsheet?
A great way to track and monitor your expenses is through a budget planning spreadsheet. To do this, you will need to list your income, add expense categories (rent, groceries, etc.) and calculate a surplus or deficit.
To save you time, we have a budget planner and ready-made spreadsheet, both of which are free and easy to use.
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