And they’re really helpful,” Pelayo said. “There are lots of online templates that’ll help you look at spending categories and expense categories for personal finance. But if you need help visualizing what's coming in and going out, there are resources available. Writing down your after-tax salary and then adding your expenses in a notebook or a blank spreadsheet might be enough to make a plan.
This method works for many people, but it might not be right for you if necessities eat up more than 50 percent, in which case you'll need to allocate less for savings or things you want to do or buy. Websites such as NerdWallet or Money Fit offer 50/30/20 calculators to help. “It helped me to see how beneficial it is, and that we have more discretionary funds when I follow this method,” said Rogers, an intake coordinator for a nonprofit organization. Wiltrice Rogers of Allen Park, Michigan, has used this system for more than 30 years. Always start off with covering your basic needs.Ī well-known budgeting system is the 50/30/20 rule, where 50% of your income is allocated for necessities like food and rent, 30% for things you want, and 20% for savings and debt repayment. Next, she recommends categorizing where your income should be spent. Pelayo recommends using whatever method fits you best, whether that's writing it down on paper, creating an Excel spreadsheet or using a website. She suggests recording every penny that you spend rather than trying to approximate, which can lead to errors. Writing down all of your expenses is crucial, said Pelayo. Here are five important steps when you're ready to create a budget:
These include looking at how many online subscriptions you pay for or how often you eat in restaurants and cutting back where you can. Even with prices high due to inflation, Elena Pelayo, educator at How Money Works, a financial literacy organization, said there are small steps you can take to manage your money.
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