Figure out your after-tax income. If you get a regular paycheck, the amount you receive is probably it, but if you have automatic deductions for a 401(k), savings, and health and life insurance, add those back in to give yourself a true picture of your savings and expenditures. If you have other types of income — perhaps you make money from side gigs — subtract anything that reduces it, such as taxes and business expenses.
Choose a budgeting plan. Any budget must cover all of your needs, some of your wants and — this is key — savings for emergencies and the future. Budgeting plan examples include the envelope system and the zero-based budget.
Track your progress. Record your spending or use online budgeting and savings tools.
Automate your savings. Automate as much as possible so the money you’ve allocated for a specific purpose gets there with minimal effort on your part. An accountability partner or online support group can help, so that you’re held accountable for choices that blow the budget.
Revisit your budget as needed. Your income, expenses and priorities will change over time. Adjust your budget accordingly, but always have one.
Based in Sydney, Leo is a financial writer who cares about debt and financial independence. His posts explore Fintech, current events and impacts on individuals, families and their finances.
