The holidays are over and it’s back to real life. As much as you might want to “be sick” for a few more days, you have to go to work because of all the extra spending you allowed yourself because, “it’s the holidays!” It’s also the time of the year where people choose their New Year’s resolution and gyms get fuller – some say there’s a connection. If you have money worries on your mind, then this year make a budget to tidy up your finances!
Yes, the word “budget” instills immediate dread and resistance for a lot of people, but once you get everything organized and a plan to have enough money for the year and even next holiday season, you’ll be grateful that you made one. Don’t worry though because you can use apps, some free, and these tips for making a budget this year.
What You Should Budget For
There are two main budget categories: Essentials and Non-Essentials
The Essentials or “Must Be Paid” expenses usually include:
- Housing – if you want a roof over your head, you need to keep a part of your income to do that either through your mortgage payments or rental payments.
- Transportation – unless you walk everywhere all the time, you need some funds for getting around. This includes auto-insurance and car payments and/or money for public transportation.
- Food – it’s hard to find free food and you have to eat to survive so you need some money earmarked for it. Estimate your monthly food spending from any record of your recent spending and average out what you usually spend.
- Healthcare – if you have your own insurance plan, this category should be your monthly payment. If you don’t have an insurance plan, you can put away what you can for any medical costs. If you have to pay for medication, you can adjust this category to however much you spend on that.
- Savings – this category is where the money that you want to use later in life or for a rainy day. After figuring out how much money goes into the essential categories, you can determine how much you can put away each month.
You might first want to take into consideration the non-essentials or the “Mostly for Me” expenses include:
- Personal spending – this amount is just for you and whatever you feel like buying. You might find that you might not have enough to spend as much as you used to, but you can always adjust your spending in a way that you can!
- Recreational – You don’t want to be holed up every day just because you’re saving money. Budget some money for fun things like going out to the movies, concerts, and any entertainment subscriptions you have like Netflix or Spotify.