4 Tips to Help You Set Your Budget Amounts
Believe it or not, I feel like this question is the question that gets asked a whole lot when someone first starts creating a budget.
“How do I know how much to budget for each category?”
Well friends, I’m here to help you solve this issue.
No, I’m not going to give you a number. Let me just say that off the bat so that you are not expecting anything and get disappointed. But I am going to give you the tools I think you need to answer that question for yourself, because after all, everybody is different. Our money should be dealt with differently than others as well.
Let’s dive in shall we?
4 Tips to Help You Set Your Budget Amounts
TIP #1 Know Your Numbers
“Your numbers” means your income, debt, savings account, checking account, all the accounts! Anything associated with you and a dollar sign you should be aware of. Knowing these numbers helps you to be aware of the whole picture.
Do you still have a lot of debt to pay off? Then you better budget higher for that category.
Do you not make that much during the winter compared to summer? You’re going to need to make sure you budget enough in the on season for the off season.
Do you not have enough in your savings account and need to continue to build that? You’ll need to add that amount into your budgeting categories as well.
Knowing your numbers is my first tip, but really it’s the first step in knowing how much to budget for each category. You can’t go into it not exactly sure how much you are making or how much you own.
Know your numbers and then you can begin the process.
TIP #2 Know What You Like
This is the biggest tip or advice I can give you when figuring out how much to budget for each. It’s also why I don’t believe in giving you generic amounts or percentages.
Budgeting, and money for that matter, is all about priorities and what matters to you. Things that are important and worth the money to you, may not be worth the money or important to someone else. Let me use some examples to help better explain.
Maybe having real, whole organic food is a non-negotiable for you. It is really important to you so your food budget should reflect that. The amount you budget for food will be higher than someone who isn’t too concerned about organic food and just wants something cheap and fast.
Or, maybe it’s important to you that you only buy fair trade items when shopping. If this is the case your shopping budget will probably be a little higher than others. It should be obvious when someone looks at your budget what your priorities are and what you like.
I believe that it is fine to spend a little more on things that are important to you, but I also believe that means you have to cut back in other ways and places in order to do that.
If you want to have a fund just for your hobby you might cut way down on another category in order to afford it. All your categories in your budget will not be the most important to you. Know what you like and what is important to you and then cut back in other places in order to budget it all in.
This way, you are still within your budget, being wise with your money, and are able to keep those things that matter to you.
TIP #3 Know Your Goals
Goals. Goals. Goals. All good things come from goals and a plan. Your budget will be your plan so make sure you have a goal to go with it! Knowing your financial goals will help you to reach them faster! When you have a clear path of where you are going, you are bound to get there much faster!
Whether it is to be debt free, save a down payment for a house (Hi, us!) or just to purchase something specific, know your goals so that your budget can reflect them and be working with you towards them!
TIP #4 Do Some Testing
Don’t be afraid to go back to the drawing board after the first month or few weeks of trying out a new budget.
You may budget a certain amount and then realize there is no way you can only spend that much money. Or maybe you budgeted too much and realize you don’t really spend that much on that category every week. Whatever it is don’t be afraid to go back and change it.
As you work through your new budget take note of things that can be changed for the better. Do you need to go out to lunch multiple times a week? Do you need to stop by the store on your way home? Is there a way you could save on your electric bill?
Continuing to work with your budget and the numbers you set up will only get you closer and closer to a budget that works perfectly and your financial goals because of it!
Okay, so I hope that gave you the tools you’ll need to figure out the amounts you should budget each category at. It can be totally new territory for someone who has never even attempted a budget. Luckily if that is you, this blog is JUST the place for you! Take a look at some other posts around the blog if you still want some help or ideas.
Let us know in the comments if you have any other tips for budgeting your categories of bills and spending!