A-Z Series: Budgeting and Saving Money (Things You Need To Do)

Budgeting is a simple concept everyone should adopt

No, you really do not need the latest Iphone. 

Budgeting is a life skill that requires discipline and careful planning. With the cost of living constantly on the rise, it can be a challenge for people to keep up with everyday expenses and bills. It may take some time and effort to master this skill, but the benefits are well worth it in the long run.

A - Assess your income and expenses. 

To calculate your monthly income, add up all the money you receive from your job or any other sources of income, such as rental properties or investments. Next, calculate your monthly expenses by listing all your regular bills, such as rent or mortgage payments, utilities, groceries, transportation costs, and any other expenses you have. 

Be sure to also include any irregular expenses that may come up, such as car repairs or medical bills. Once you have a clear understanding of your income and expenses, you can create a budget to help you manage your finances more effectively. 

B - Budgeting tools: 

Budgeting is an essential aspect of financial management, and it is crucial to keep track of your expenses to avoid overspending and stay within your means. To make the process easier, there are various budgeting tools available that can help you manage your finances efficiently. Start using a spreadsheet or better yet a budgeting app. The apps have advanced features will can really help you.

C - Cut back on unnecessary expenses: 

One of the best ways to save money is to identify areas where you can cut back on expenses. Things like cutting back on eating out, impulse purchases, subscriptions are the first to look for. Identify areas where you spend money without getting any true value or joy from. There are a number of ways to cut back and start being more frugal.

D - Debt management: 

Having debt can be a significant source of stress and financial burden. It is essential to create a plan to pay off your debt as soon as possible. The longer you wait, the more interest you will accumulate, making it harder to pay off in the long run. Use the 70/20/10 method to help you allocate your funds.

E - Emergency fund: 

Everyone should strive have a financial safety net in case of unexpected expenses. One way to do this is to set aside money specifically for emergencies, such as car repairs or medical bills. It is recommended to save at least three to six months' worth of living expenses in case of job loss or other unforeseen circumstances. This can provide peace of mind and help prevent financial stress during difficult times. 

F - Financial goals: 

Setting financial goals is an essential step towards achieving financial stability and success. Set both short-term and long-term goals to ensure that you are on track to meet your objectives. Short-term goals are those that can be achieved within a year or less, while long-term goals take longer than a year to achieve. 

G - Get organised: 

keep all of your financial documents in one place to ensure that they are easily accessible when needed. This can include bank statements, bills, receipts, tax forms, and any other financial paperwork. By keeping everything organized and in one location, you can quickly find the information you need and avoid the stress of searching for lost or misplaced documents. 

H - Hobbies: 

There are many low-cost or free hobbies and activities that you can explore to keep yourself entertained and engaged. For example, if you enjoy reading, you can borrow books from your local library instead of buying them.If you enjoy cooking, you can experiment with new recipes using ingredients that you already have in your pantry. 

Other low-cost hobbies might include gardening, painting, drawing, knitting, or playing board games with friends or family. By finding hobbies that align with your interests and don't require a lot of money, you can save money on entertainment expenses and still have fun.

You might be interested in reading about how Minimalism can help you with your money and finances.

I - Invest in yourself 

Investing in yourself is one of the best things you can do for your future. By taking courses or attending workshops that focus on improving your financial literacy and skills, you can gain a deeper understanding of how money works and how to manage it effectively. 

These courses can cover a range of topics, from basic budgeting and saving strategies to more advanced investment techniques. By learning these skills, you can make better financial decisions, avoid costly mistakes, and ultimately build a more secure financial future for yourself and your family. 

J - Just say no:

One of the best skills to develop when managing your finances is the ability to say no to impulse purchases or unnecessary expenses that can quickly derail your budget. It's easy to get caught up in the moment and make a purchase that you don't really need or can't afford, but this can have serious consequences for your financial health in the long run. T

To avoid falling into this trap, take a step back and evaluate each purchase before making it. Try the 30 day spending rule to help you.

K - Kickstart side hustles:

There are many ways to generate additional income beyond a full-time job. Freelancing is a great option, especially for those with specialized skills such as writing, graphic design, or programming. This can be done on a project-by-project basis and can often be done remotely. 

Starting a small business is also a possibility, although it requires more time and effort upfront. Evaluate your skills that you might have and brainstorm ideas on how your skills can help others.

L: - Learn DIY skills:

DIY skills can not only save you money, but also give you a sense of accomplishment and independence. By learning how to fix minor issues around your home, you can avoid costly repairs in the future. DIY projects can be a fun and creative way to personalize your living space. 

With the abundance of online tutorials and community workshops available, there are endless opportunities to learn new skills and improve upon existing ones. 

M - Meal planning: 

Planning meals ahead of time is a great way to save money on groceries and reduce food waste. By taking the time to plan out your meals for the week, you can make a grocery list that includes only the ingredients you need, which can help you avoid buying unnecessary items. This can also help you avoid impulse purchases, which can add up quickly. 

N - Negotiate bills: 

Negotiating bills for cable or internet services can be a great way to save money on your monthly expenses. By calling your service provider and asking for a better rate or discount, you may be able to secure a lower monthly bill. Always be polite and persistent when negotiating, and to have a clear idea of what you're looking for before you make the call.

O - Online shopping: 

One way to avoid overspending when shopping online is to set limits on your online purchases. This could involve setting a budget for each shopping trip or limiting the number of items you buy at one time. Another strategy is to use cashback apps, which can help you save money on your purchases by offering cashback rewards or discounts.

P - Prioritise savings: 

One of the most effective ways to priortise savings is by setting aside a portion of each paycheck towards savings goals. Remember that even small amounts saved over time can add up and make a significant difference in your financial well-being. So, make saving a priority and take control of your financial future today!

Q - Quality over quantity: 

Instead of buying multiple low-quality items that will need to be replaced frequently, invest in a few high-quality items that will last longer and provide more value over time. This could mean spending more money upfront, but it will ultimately save you money in the long run. 

R - Retirement planning: 

Planning for retirement early is crucial to ensure that you have enough money to live comfortably during your golden years. The earlier you start saving and investing, the more time your money has to grow. 

This means that you can take advantage of compound interest and potentially earn more returns on your investments. Try and consider factors such as inflation, healthcare costs, and unexpected expenses when planning for retirement.

S - Stick to the plan: 

It can be challenging to stick to a budget plan, especially when unexpected expenses arise or when you feel tempted to splurge on something you want but don't necessarily need. Remember why you started budgeting in the first place. 

Perhaps you're saving up for a down payment on a house, paying off debt, or building an emergency fund. Whatever your financial goals may be, staying committed to them is crucial for achieving long-term financial stability and security.

T - Track your spending habits

By keeping a close eye on your expenses, you can identify areas where you may be overspending or where you can make adjustments to your budget plan. For instance, if you notice that you are spending too much on dining out, you can cut back on this expense by cooking more meals at home. 

Or if you find that you are spending too much on entertainment, you can look for free or low-cost alternatives such as visiting a park or attending community events. By making these adjustments, you can free up more money to put towards your financial goals.

U - Use credit wisely:

Credit cards can be a useful tool for managing finances and building credit, but you need to use them wisely. One of the best ways to do this is by paying off balances in full each month. This not only helps avoid accumulating high-interest debt, but also keeps credit utilization low, which can positively impact credit scores. Try and avoid overspending and only use credit cards for purchases that can be paid off in full. 

V - Value-based spending: 

When you spend money on things that align with your values and priorities, you are investing in yourself and your future. For example, if you value health and wellness, you may choose to spend money on a gym membership or healthy food options.

 If you prioritize education, you may choose to invest in courses or books that will help you learn and grow. By aligning your spending with your values and priorities, you are also more likely to feel fulfilled and satisfied with your purchases. This can lead to a greater sense of purpose and happiness in your life.

W - Wants vs. Needs: 

When it comes to making purchases, distinguish between wants and needs. Wants are things that we desire or wish to have, but they are not essential for our survival or well-being. Needs, on the other hand, are things that we require in order to live a healthy and fulfilling life. These include things like food, shelter, clothing, and healthcare. When creating a budget plan, prioritize needs over wants. 

X - X-ray vision for hidden fees: 

Always be vigilant when it comes to financial products such as bank accounts and credit cards. Many of these products come with hidden fees that can add up quickly and eat into your savings. These fees may include monthly maintenance fees, overdraft fees, ATM fees, foreign transaction fees, and more. Before signing up for any financial product, it is crucial to read the fine print carefully and understand all of the associated fees. 

Y - Yearly review: 

Conducting a yearly review of your finances is an essential step towards achieving financial stability and security. This review should include a comprehensive analysis of your income, expenses, savings, investments, and debt. By assessing your progress towards achieving your financial goals, you can identify areas where you need to make adjustments to stay on track. 

Z - Zero-based budgeting: 

Zero-based budgeting is a budgeting method that requires every dollar to be allocated towards a specific expense category. This means that instead of starting with the previous year's budget and making adjustments, the budget is created from scratch each year. 

This approach helps ensure that every dollar is accounted for in the budget plan, which can help prevent overspending and ensure that funds are allocated to the most important expenses. (Change dollar to whatever your currency is :)).

Budgeting a lot of the time just comes down to being sensible and knowing what you have going in and out and being fully aware of your essential expenses. I know it sounds simple, but with some control and discipline it can be simple for you as well.

Also have a read of steps to becoming debt free and 5 budgeting tips.