It is often not because of a low salary that there is no money left at the end of the month, but because of incorrect or non-existent budget planning. It can be so easy. And so wonderful at the end of the month when you can actually put some money aside.
There are different ways to budget, but each method follows the goal that you get insight into your finances.
The popular 50-30-20 rule
With the 50-30-20 rule, you decide in advance what percentage of your income you want to spend on something. It practically does the work for you and tells you what percentage you should plan for what. 50% is earmarked for basic expenses/fixed costs, 30% for your personal needs and 20% for savings, paying off debt or building wealth.
Money in envelopes
Budget planning with envelopes is a bit old-fashioned, but anyone can do it. It works like this. You use your budget to determine how much money you want to spend this month. You then withdraw this money in cash and put it in different envelopes. An envelope for groceries, gas, clothes, weekend trips and so on. Is an envelope empty? Then you simply have to wait until the next month before you can spend money on a certain category again.
Fixed amount per type of cost
With this variant, you agree a fixed amount per cost element with yourself. This is similar to budgeting with envelopes, except you don’t have to withdraw any money to do it. So keep an eye on your expenses and check in your banking app and which cost item an expense falls under. This way you avoid going over your set amounts. If you don’t have an app yet, you can check for the best budgeting app for couples. Evaluate every app and choose the best for you as a couple.
Transfer money to the savings account first
With this method, you first transfer an amount to your savings account to increase your financial buffer or nest egg. You use the rest of your income for your rent and other bills. But be realistic, otherwise you run the risk of having to transfer money back to your checking account at the end of the month. And of course that’s not the goal.
Practice creates masters
If this is the time for your first budget plan, don’t give up if things don’t go smoothly in the first few months. Finally, it’s difficult to estimate how much money you’ll need monthly per cost item. So it makes sense that you adjust your budget plan from time to time.