Last week, we suggested that renters set up budgets to help them stay financially stable, but how do renters learn how to use this important financial tool to ensure a successful financial future? Is it just skipping a purchase once in a while or is it sitting down and mapping out the use for each dollar? Here are six steps to help you set a successful budget that you will be able to stick to.
- Measure your expenditures. Take a month or two and monitor all of your spending to see how and where you are spending your money.
- Determine which expenses are unnecessary. After you have monitored your expenditures for a set amount of time, sit down and examine the purchase you have made and determine which ones are and are not necessary.
- Cut extra expenses. If you are spending $50 a month on subscriptions you no longer use or $100 a month on miscellaneous cab rides, try subtracting these expenses from your total expenses to see just how much you could be saving. You can use the WilliamPaid Simple Savings Calculator for help in deciding which expenses you could be cutting down on.
- Map out your required expenses. Make sure you set apart enough money each month to cover all of your bills including rent, electric, cell phone, etc.
- Split up the spare. Designate the money you have left to other expenses required or not. Set a reasonable budget for food, transportation and entertainment, and do NOT exceed those limits. This will force you to be smarter with your money and more conscious of your purchases. Also, be sure that you set aside at least 10% to save. You’ll be glad you did when you find yourself in a tough spot or have an unexpected expense.
- Review for success. Try out the budget you have designed for three to six months and then take a second look at your budget. Have you been able to stick to it or has it been very difficult to follow? If it is working, then continue full steam ahead. If not, then start over and rework the budget until you get it right.
Budgeting is challenging for many, especially with all sorts of temptation around every corner, but with a little trial and error, you can find a happy medium that not only helps you cover your expenses now, but also sets you up for a brighter future. Check out the WilliamPaid Challenge and follow Katya, a recent graduate, who decided to get her budget and post-college life in order with the help of WilliamPaid.
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