Step 3: Divide Your Expense List into TwoĮxpenses are usually divided into two. And what expenses to cover depends if you are planning a daily, weekly, monthly, or yearly budget plan. You will eventually calculate your income and list all your expenses. You would need access to your income and expense statements to know what information is needed to present in the budget plan. Step 2: List All Your Financial Statements Focus on your goals so you’ll know how to form your budget plan. Maybe you are budgeting for an event, business proposal, marketing plan, or just a personal financial plan. And the key is to conduct a financial analysis first to determine your specific needs and goals in financing. Hence, a budget plan is not one-dimensional. In fact, budget planning is achievable when you follow these easy steps: Step 1: Analyze Your Budgeting GoalsĮvery person has his or her budgeting goal. But it is important to apply your knowledge in realtime by finally learning how to make the budget plan itself. You already know what the budget plan and the 50-30-20 rule are. In fact, you can transform your savings someday into better investments like a new business, event, or project. It would be wise to set at least 20% of your savings to prepare for the worst, like losing your job. You could end up spending too much without any savings left. 20% Savings: Lastly, don’t put your savings into limbo. Spend only around 30% on your wants bucket list. You might end up falling in love with a new pair of shoes, craving for an expensive dinner at a luxurious restaurant, or perhaps, dying to see a movie premiere that costs a lot. 30% Wants: When something is not very important but you want to spend it for satisfaction, that is a want. If you realize you spent more than what you spend for your needs, then you better alter your lifestyle, especially if your after-tax income is insufficient. Examples include your grocery, rental payment, insurance, student loan, utilities, or any other household budget. But what exactly are they? Learn about the principal financial tip further in this section.ĥ0% Needs: For your regular income, be sure to set 50% towards your important obligations or needs, meaning they are essential for survival. Principal Financial Tip: The 50-30-20 Budget RuleĪccording to Investopedia, Elizabeth Warren’s known 50-30-20 budget rule is one of the most effective budgeting tips. Senator Elizabeth Warren’s book explained the popular 50-30-20 budget rule wherein you spend 50% for your needs, 30% for your wants, and 20% for savings. Hence, this is your official document worth using when you need to spend your money for whatever purpose wisely. More so, the plan helps you estimate, compare, and track your daily, weekly, monthly, or annual expenses.
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