Most of us would rather go to the dentist than learn how to budget, but we’ve broken it down into 5 easy steps, so you can afford that new car/apartment/holiday sooner!
First thing’s first
Write down your monthly after-tax income.
Next, write down your total monthly expenses (including rent, bills, fuel, credit card payments, dining out…everything). Subtract from your after-tax income. Now you’re going to divide up what’s left into four amounts using the 10 percent rule:
1. The first 10 percent goes to retirement. It doesn’t matter how old you are. The younger you start, the better off you’ll be. No one wants to be poor in their old age.
2. The next 10 percent goes towards your big goals, like that new car, financing an apartment, that trip you’ve always wanted to take to New York.
3. Put away the next 10 percent for unexpected expenses. Think you won’t need this? Imagine leaving your mobile phone in the back of a cab and needing to buy a new one. Or you need to buy your friend a baby shower gift. Or a relative falls and breaks their arm and you need to help them out with medical bills.
4. Finally, save 10 percent for yourself. This could go to any of the above, or to treat yourself to a nice bottle of wine/a back massage/the shoes you’ve lusted after which are finally on sale.
What’s your best budgeting tip?