Minimalist budgeting: How to save the most, using the least effort
A budget is an absolute must if you want to get a handle on your money. Budgets can be over-complicated and stringent ones often lead to failure, disappointment and self-loathing!
First set aside no more than 50 percent of your income for essential expenses. No matter how much you earn, 50 percent of your income should be a sufficient amount to cover your essentials- if not, you may want to re-evaluate whether you are living within your means. Essential expenses include:
- Transportation costs
- Utility bills
20% into Savings
Next dedicate 20 percent of your income towards savings. This includes money into your savings account and money towards your debt payments.
Do not avoid debt! Pay off your debt as quick as possible; the less debt you have, the more money you can put into savings.
You should aim to put a small amount into an emergency account too. This will help you avoid future debt.
30% on personal expenses
The best part but also the most significant- spending money on yourself. Never spend more than 30 percent of your income on personal expenses.
The reason this category takes up a large part of your income is because you may consider many of these expenses as essentials, when in reality they are an extra luxury.
For example personal expenses include cell phone bills, television bills, gym memberships and hair appointments.
Of course this category also includes leisurely expenses such as eating out and going to the movies.
If you find 30 percent of your income is not enough to cover your personal expenses, it may be time to trim down. Change your phone plan; cancel your Sky subscription or gym membership; all these extra expenses add up.