How to Make a Budget Plan
If you’re looking at your bank account and wondering what your financial future might hold, you need to make a budget plan. Here’s how to make a budget plan for your needs.
The stress of having an empty wallet can take a toll on anyone. If you run out of food because of overspending or an emergency eats up your cash, you could be stuck in a tough place for a long time.
Even if you’ve got a little leftover, not knowing how much you’re spending makes it hard to plan ahead for bigger purchases and, in the long run, for retirement. Here is how to create a budget plan in a few simple steps!
Creating a Budget in 5 Easy Steps
1. Assess Your Assets
To learn how to make a budget plan that works for your household, gather all of your financial documentation. This includes:
- Bank statements
- Records of automatic deposits or paychecks
- W-2s, paystubs, and one-off job records
- 1099s
- Credit card bills
- Receipts
Having the proper paperwork in order gives you a massive head start.
Once you’ve got your paperwork, calculate how much net income you have every month. This is the amount of money you’re bringing home after expenses, including any child support or Social Security payments.
2. Sort Your Spending
Look through your paperwork and identify all of the places where you’re spending money. Once you have them all, separate them out into needs, wants, and savings.
Your needs might include:
- Groceries
- Gas
- Utilities
- Insurance
Your wants might include:
- Music or video subscriptions
- Games, books, and other entertainment
- Dining out
Your savings might include:
- Emergency fund deposits
- 401K and other retirement deposits
You’ll also want to calculate how to make a budget plan based on how much you’re spending on any debt repayment, such as on a credit card. Figuring out expenses lets you know how to make a budget plan that suits them rather than a generic goal.
3. Get Some Goals
If you want to know how to make a budget plan, you need to be working toward a goal. There are two kinds when it comes to budgeting: short-term and long-term. They’re both important when drawing up your budget.
Short-Term Goals
Short-term goals are ones that can realistically be met in a year or less. This might include paying off a credit card balance, saving for a particular event, or making a large purchase such as a new car. These are the goals that will change month-to-month or year-to-year and motivate you in the moment for visible rewards.
Long-Term Goals
Long-term goals may take several years to work toward. This could include retirement savings, paying for higher education for your children, and mortgage repayment. These will be a consistent part of your budget for longer portions of your life.
4. Prep a Plan
Once you understand your income, spending, and goals, it’s time to finally figure out how to make a budget plan. There are quite a few templates you can use for this, but two good ones to start with are the 50/30/20 plan and the zero-based plan.
The 50/30/20 Plan
The most commonly used personal budget plan is called the 50/30/20 plan. It’s all about percentages.
- 50% of your monthly income goes to needs spending.
- 30% of your monthly income goes to wants spending.
- 20% of your monthly income goes to savings and other expenses.
So, if your monthly income is $1,000, you would set aside $500 for needs, $300 for wants, and $200 for savings and other expenses.
The Zero-Based Plan
If you want to figure out how to make a budget plan that's got a little less wiggle room, this is a good option. Your monthly income and monthly expenses should be the same number.
Let’s say again that your monthly income is $1000. You might break your budget down like this:
| Groceries | $250 |
| Utilities | $150 |
| Insurance | $100 |
| Internet and Phone | $100 |
| Subscriptions | $50 |
| Dining Out | $50 |
| Savings | $300 |
Add everything up, and it’s $1000 in spending. Your income and expenses are equal.
It’s a great plan for those who have a set monthly income; whatever you don’t spend on needs and wants gets saved, rather than a set portion. It requires careful and detailed planning of your expenses.
5. Stick to It
The most important thing about budgeting is sticking to your budget. Avoid making any purchases you haven’t accounted for, and if emergencies do come up, revisit your plan and work those expenses into it.
Check-in regularly and record your progress to see how well your budget is working and adjust it to fit your needs. Budgets are only as effective as you let them be. If you have clear, definite goals to work toward and a concrete plan for getting there, you’ll be able to spend the money you have the way you want to. Maintaining a monthly budget can help you keep to your budget and the goals you have set.
Work Around Income Quirks with an Online Title Loan
Most budgeting plans work on the assumption that you have a steady income. What happens if that income is interrupted by the loss of a job, and you need money to cover day-to-day expenses? Missouri Title Loans, Inc. would like to help you figure out how to make a budget plan with an online title loan.
Title loans can help you tap into cash you need quickly and easily. You don’t need to be employed to qualify, you don’t have to worry about having the loan reported to credit agencies, and you get to keep your car during the life of the loan.
Missouri Title Loans, Inc. can offer you an online title loan of up to $15,000. The process for signing up takes only 30 minutes. All you need are your driver’s license or state ID, lien-free vehicle title, and your vehicle for inspection.
You don’t need a checking account to qualify for an online title loan, and any kind of credit – good, bad, or none at all – is acceptable.
Apply Today for Missouri Title Loans!
Apply in person or online today with Missouri Title Loans, Inc. All you need to do is click the “Apply Now” button on the top right of our website and follow the instructions given. Get started with your Missouri online title loan today to receive the same day cash for your emergency needs!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.