HERE ARE SOME WAYS TO SAVE MONEY BY MAKING PROPER BUGET FOR YOURSELF-
Assessing Income: First of all, it’s important to mention the most obvious income sources – salaries, side jobs (freelance work), and passive income. To be realistic, it’s necessary to look at your net income (after-tax earnings) rather than gross income. FOR EXAMPLE :
List All Sources of Income:
- Salary:
- Monthly salary: $4,000
- Annual salary: $48,000
- Freelance Work:
- Freelance graphic design: $500 per month
- Annual freelance income: $6,000
- Passive Income:
- Rental income from a property: $1,200 per month
- Annual rental income: $14,400
- Investment Income:
- Dividends from stocks: $200 per quarter
- Annual investment income: $800
2. Calculate Total Annual Income:
- Salary: $48,000
- Freelance Work: $6,000
- Rental Income: $14,400
- Investment Income: $800
Total Annual Income:
$48,000 + $6,000 + $14,400 + $800 = $69,200
3. Calculate Net Income (After Taxes):
Let’s assume the effective tax rate is 20%.
- Estimated Tax:
$69,200 × 20% = $13,840 - Net Income:
$69,200 – $13,840 = $55,360
Summary
In this example, the individual’s total annual income is $69,200. After accounting for taxes, the net income is $55,360. This net income provides a clearer picture of the money available for budgeting, saving, and spending.
Tracking Expenditures: Divide your expenses into fixed (rent, gas) and discretionary (food, entertainment). Take a monthly expenditure sheet or, even better, an expenditure monitoring program and record your everyday spending over a period of thirty days.
Setting Financial Goals: Specify short-term (holiday, corner market) vs. long-term goals (buying a house or retirement). Also, set a specific dollar denomination and timeframe to each goal for them to be goals and not just dreams.
Budgeting Techniques
50/30/20 Rule: Spend 50% on needs, 30% on wants, and save the remaining 20% or pay off debts. This approach is definitely easy to understand and adjust to one’s lifestyle.
Zero-Based Budgeting: All income is allocated into different roles in advance such that no additional surplus is remaining in the budget at the end of the exercise. This encourages very accountable and purposeful spending.
Envelope System: Cash is divided into envelopes for different spending categories. It is very simple, once the envelope is finished one can not spend on any more of such purchases. Great for managing last minute unnecessary spending.
Monthly vs Annual Budgeting
Monthly Budgets: According to the plan establish a budget for every month and clearly include all sources of income and expenditures. This budget will be aimed at collecting data about the user and monitoring the changes in his or her spending behavior, as well as controlling relevant modifications.
Annual Budgets: Think about looking at the cost of things like stochastic benefits, property turn costs or even cheap expensive trips. Look at the cost of such expenditure in the monthly budget, so that when they come you will not be strained financially.
Adhering to Limits
Assessment on a Periodic Basis: Inform users to look over their budgets on the weekly or monthly basis. This is important in spotting patterns, being aware of the way money has been spent, and making changes where it is needed.
Dealing With the Unforeseen: Stress the need for the element of realism in any budget. It would be wise to put aside a small part of one’s income for unforeseen costs so that the budget does not collapse due to such events.
Scheduling Alerts: Encourage the users to programme their calendars with alerts for reviewing budgets, paying bills, and assessing the progress of financial goals. Such practice helps in ensuring that financial issues remain a priority and promotes responsibility.