There are many budget success programs available and you have probably seen and read a few of them.
The key to a successful budget plan is to remember the central focus should be your happiness. True happiness does not blossom in the doldrums neither does it blossom purely because of massive financial wealth.
Your personal circumstances are often unique. Different needs, different values, and different responsibilities mean that it is really impossible to create a line-by-line budget for you to follow. Rather than give you a budget plan that you must stick to, we are outlining below common threads and concepts that may help to you create your own personal financial budget.
Successful Monthly budget plan
Budget Income: Nett not Gross
Many financial budgets work with your gross income (before taxes) but let’s keep things real. You can only spend your nett income (after taxes) so the first thing to do is know how much nett income you have each month.
Figuring out how much monthly income you have:
- If you get paid monthly then it is easy – it’s the number you have deposited into you bank or put into your hand.
- If you get paid biweekly then multiply it by 2.15
- If you get paid weekly then multiply it by 4.3
This will give you a solid starting point for how much you earn each month.
Budget Expenses
We often have different expenses so we are going to group them into a few different categories:
- Tier One – Absolute expenses such as mortgage or rent, food, and utilities. You should also include current loans, transport costs, insurance, and any other expense that must be paid each month.
- Tier Two – Lifestyle expenses such as cellphone bills, TV and internet packages, and entertainment. These are often things that you want to have rather than things you absolutely need in life.
Budget Goals
80% of your nett income spent on tier one and tier expenses is a goal you should set.
Of the remaining 20% you should try and save as much as possible.
Reality Check
It is human nature to push the boundaries of the goals outlined above. We often stretch for that bigger house, the flashy car, fine dining, toys and gadgets. When you look back to your main focus of true happiness it is important to realize that pride should not take precedence. Struggling with debt never made anyone happy.
What To Do Now?
- Using spreadsheet software or pen and paper itemize each of your current monthly expenses.
- If your current expenses exceed more than 80% of your income then see where you can cut back on your tier two expenses. Example: scale back you TV, cellphone, and internet packages to cheaper options.
- Realize that the 20% you have “left over” each month is there for a reason, emergency needs without the means to cover them can br crippling to the pursuit of true happiness.
- Take action, give it a try, budget for your happiness.
- Take a look at our Financial Budget Example.
