Personal Financial Tips- Part 2- “Budgeting”
Budgeting is one of the most important personal finance tips. Without a budget, you can easily be spending more money than you earn, which can make it challenging to:
- Pay off debts
- Save for the future
- Afford an emergency expense
Consider these budgeting tips as you plan for the future.
Budget for College Early
Student loans are awful.
- What do you need to know about college debt?
Traditional four-year colleges are often unaffordable without taking on massive debt—and don’t necessarily provide a better education.
- What can you do to prepare?
If you’re a middle-class family, it might be worth considering sending your kids to a community college, in-state public university, military academy, or elite private college. This way, they won’t take on as much in student loans that can take decades to pay off.
- When should you start saving?
Retirement savings come before college savings. If you can’t afford to save for your kid’s college, don’t make it a priority quite yet. Even if you can’t afford to save now, open a 529 college savings plan for grandparents or other family members to contribute to.
Carefully Plan When Buying a House
Aggressively paying down a mortgage is another important personal finance tip worth considering.
The best measure of your readiness to buy a house is the size of your down payment. Be wary of making a down payment under 20%, even through a government loan program.
Stretching to buy more house than you can afford can often lead to painful and avoidable financial misery.
Take Advantage of Budgeting Resources
You don’t have to go at budgeting alone. Carefully tracking your finances without any help can be overwhelming and stressful. Fortunately, there are plenty of resources out there that can help you track your income and expenses and make smart financial moves.
- Mymoney.gov has plenty of financial wellness tips that you can take advantage of and learn a thing or two.
- There are tons of free budgeting apps that can help you manage all of your finances in one place, including your bills, balances, and credit score.
Try the 50/30/20 Budgeting Rule
Sometimes, all you need is a little guidance to help you build a strong and manageable budget.
- What is the 50/30/20 budgeting rule?
A great money management tip is following the 50/30/20 budgeting rule, which goes as follows:
- 50 percent of your income goes toward your essentials, such as housing, food, transportation, and utilities
- 30 percent of your income goes toward your wants, such as a nice smartphone, entertainment, and travel
- 20 percent of your income goes toward your savings and debt repayments, such as your student loans, medical loans, and auto loans
- How can the 50/30/20 budgeting rule improve your finances?
Income management is an essential skill needed to budget correctly, and with the 50/30/20 budgeting rule, you can make this happen. With this budgeting rule, you can create a solid plan to meet your financial goals by identifying areas where you can cut or reduce expenses. This is one of the most common personal finance budgeting tips you will find.