Budgeting is the process of creating a financial plan to spend your money over a while. Nowadays, with COVID-19 restrictions happening again, saving money becomes more important than ever. Therefore, you must learn how to save your capital adequately. Moreover, I believe is a matter of responsibility, as everyone needs to learn how to budget their money and to revise their spending habits. Prioritizing and focusing on the things that are key for you.
Next, I will discuss some points on why you should have a budget in 2021.
- How important is it to have a budget? Why?
Budgeting allows you to plan before you spend your money. It will also help you get yourself out of debt and helps avoid getting more loans when you are not able to commit to them. Having a plan ensures that you will always have available money for the things you need. If you or your household want financial security, planing on a Budget is the best option. Other reasons to have a budget are:
- Will help you have a better retirement. The more money you can save, the more it can go straight to your retirement account. Keep in mind that saving is also vital for your future.
- Readiness for emergencies. Having some savings available for use might help you to overcome unforeseen events. On the other hand, if you need some quick cash, applying for a loan might be a good idea here. For example, fast loans with no guarantors give you the option even if you do not have a good credit score.
- Spotting bad spending habits. Setting on a budget will obligate you to stop spending your money in those things that you do not need- you will re-focus on your financial goal.
2. Is there a connection between saving money and having a well-planned budget?
There is a connection between these because if you have a well-planned budget, you are more likely to reserve funds for your savings as well. It can be a hardship process at the beginning, but once you have set up the habit, you will benefit from some peace of mind.
3. Does budgeting helps out with most current expenses & bills?
Moreover, budgeting helps in both the current and plans. Since it is making you set a portion of your money to pay for your current obligations, it’s also letting you save some extra cash.
4. How about people dealing with debt? Where should they start first?
They should think about what debt should be of priority. You should first pay the ones that are getting more interest. This way, you’ll be free of those interests and sooner or later will save more money. That is why budgeting is so relevant, as it can help you get out of debt, or plan your finances so that you can to save and pay cash for big purchases avoiding debt in the first place.
5. How much money should people should save with each paycheck?
For me, any amount of savings is a good start however; I think we should all save at least 20% of our monthly income and cut on those that are not needed. Moreover, following the 50/30/20 rule, you should keep 50% of your budget for basic expenses like food and housing, 30% for other optional spending, and a final 20% for savings.
6. What is the first step for organizing a budget?
The first point when setting any budget is, of course, to calculate your expenses. Your most recurring expenses, such as rent, car payments and bills have a monthly due date, so it could be a good idea to calculate your spending monthly. The next step would be to keep a clear record of those while trying to keeping your financial goals in mind.
7. What is your most effective money-saving tip?
My most practical and effective way of saving money concretely in these trying times is cutting or cancelling subscriptions that you can live without, for instance, gym and cable subscriptions. Anyway, you can get whatever you need from the internet nowadays.
8. When planning for the long-term, what should people consider when creating their budget?
When saving for the long term, you should identify your goals and keep a record of them, e.g. college bill, holidays, etc. Once done that, you can put all data together to set a time frame. Which expenses need to be addressed first? Which ones can wait a bit longer?
9. The best advice for making budgeting as stress-free as possible?
For stress-free budgeting, planning always wins. Keep in mind that this is not stopping you from anything but just making you adapt to the situation and planning for the future. Do not think of all the things that you have to give up, instead of this, think of the things that you would gain from it.
10. How has COVID-19 impacted people’s thoughts about money and saving?
Last but not least, this pandemic has caused an impact on many people. Most of the middle-class workers have seen their incredible Jobs fade away, although, for many, this means regrets about their spending habits while rethinking possible ways to start spending wisely. If there is a positive outcome that we can learn from this, is that we cannot take anything for granted.