Top 10 Tips on How to Plan a Budget like a Financial Planner

, , Leave a comment

For most people, money is tight these days. The economy is down, prices of commodities are up, and corporate downsizing is still on going. Now is the right time to learn how to plan a budget not just because it is necessary but also because it is a good habit to develop.

You may be thinking that you are already doing everything you can to keep your expenditure under control. However, with the right steps, your attempt to save even if you practically have enough to spend will keep you afloat during hard times and provide you with additional savings when your personal finances are in the black.

10. Realize that a budget is necessary


While this may sound trite, it is part of reality. If you do not realize and admit that you need a budget then you will never be able to create one. When you plan a budget, you have a tighter grip on your spending and you know exactly how, where and when your money is used.

9. Three steps


Act like a financial planner. Generally there are three steps to follow for you to be able to start planning a budget. First, you have to determine how you are currently spending your money. The second step might be a bit difficult but you have to persevere. Evaluate your spending pattern and set your goals for the month, the next six months, for the whole year and your goals for long-term financial stability. Now that you’ve set some parameters to your spending, apply the third step, which is to keep track of it regularly.

8. Use software to keep track


Easily keep track of your budget plan with computer software. Microsoft Money and Quicken are programs for personal finance. If you find that bothersome to learn, you could use Microsoft’s Excel. Other programs are available for free. Just use your skills to search the web and download one that is easy to use and suitable for your needs. Learn how to use it and implement your plan.

7. Do not be obsessed with it


Once you have programmed your tracking tool and have your budget plan in place, keep it updated. On the other hand you should not be obsessed with your budget planning. As long as you stick to your goals, you’ll realize that it will be part of your regular routine.

6. Keep track of your ATM withdrawals


Schedule your cash withdrawals from your ATM account. Frequent withdrawals incur surcharges. Train yourself to have an allowance and only withdraw the exact amount that you need for the week. And in case you find yourself making frequent withdrawals but do not know where your money goes, then it is about time that you also keep track of ATM withdrawals and recording your purchases.

5. Do not spend beyond your limit


This is part of reality as many households are still spending more than the money they earn. If you are in the same situation, they it is about time to turn things around. You should check your purchases for the month and weed out the necessities and those that you could do without. Knowing how to plan a budget requires discipline and persistence. You do not have to starve. It is knowing what your bare necessities are and foregoing other luxuries until such time that you could afford it.

4. Stick to necessities


When you feel that your income is just not enough to cover your monthly expenses, it is best to check where your money goes. Make an inventory of your pantry, your refrigerator and your closet. You might be buying things inadvertently thinking of them as necessities when they are in fact luxuries. You might have a closet full of clothes that you haven’t worn and accessories that you do not actually need. You might have been continuing to fill your pantry with stuff that you end up not eating. And your refrigerator or freezer might be full of items that are already out of date. If this is true then you are wasting your money buying luxuries rather than necessities.

3. Practice self-tithing


This is a practical thing to do, setting aside at least 10% of your income each month. What you should do it forget about that 10% and think that the 90% is the whole of your salary. In due time this practice will be an automatic thing for you to do.

2. Do not count the bonuses and tax refunds


When planning your budget, do not include future windfalls like tax refunds, gains you will get from your investment and the bonuses you are entitled to receive at the end of the year. Forget about these extra cash and work on your regular salary, leaving aside the 10% tithe each month. Why? Because these windfalls are still to be received and as such should not be included in your budget plan. When you work with this mentality, pretty soon your bank account will grow without you noticing it and living within your set budget will be automatic for you.

1. Avoid the spending trap


Seeing your savings grow because of you budget does not mean that you should be splurging. It is a trap the most people fall into, thinking that they deserve to spend some of the money they have taken pains to set aside. Follow your budget plan as usual and instead of touching your savings, invest part of it. At the same time, use this as your motivation to save more and continue working with your set budget that has brought you this far.

Knowing how to plan a budget and sticking with it is a smart way to save. Using the top 10 tips listed here, you’ll realize you long term financial goals in due time. Not only that, when you get used to spending within your budget, you become accustomed to a manageable lifestyle that you thought was dire initially.


Leave a Reply