How to work off a percentage based budget, and save at least 10% of your income
Budgeting is not easy, but it is important. Without a budget you would find yourself spending far too much money, and not ever having enough for the things that you need. However, not everyone can have a traditional budget where they put this much money to this, or that much money to that. The reason is that not everyone makes the same amount of money every month, week, year, etc. So, to make a budget that actually works for you if you find yourself in a similar situation, consider a percentage based budget. The following is an explanation of how to work off a percentage based budget, and in doing so save at least 10% of your income:
1. Determine an approximate percent of your income that needs to go to bills. For most people this ends up being about 60%. That is for things like house payments, car payments, insurance, utilities, debts, etc. Once you know about what yours is you can go on with the rest of your budget, however, for now, let's assume that it is 55%.
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2. Now you need to cover the rest of your expenses. So, put 10% to savings. 10% to food. 5% to gas. 5% to entertainment. 10% to charity, church, etc. 5% to miscellaneous (that is like clothes, cleaning products, etc.) That should eat up your whole budget. You will need to set your own percentages, but it is important that you consider real costs. For example, if you spend around $500 a month on groceries, and you make about $5200 a month, then 10% to groceries would be accurate. However, if you set it at 5% you would never do it. So, make sure you have a pretty accurate idea of around what you make, and around what you spend, or want to spend, then set your percentage accordingly.
3. The next thing you do is each time you get paid, divide your income out according to your percentage budget. Whether that means you put money as cash into envelopes or into a bank account and track it electronically. It is up to you, and it depends on how you find things easiest to do. However, you have to stick with your budget. If you do this you will not only be able to save 10% each month, but you will also be able to better enjoy the better months, but not scrimp too bad on the less profitable months. It also means that when you make more you save more, and when you make less you save less.
The reason this kind of budgeting system works so well for those trying to save money on a variable income is because when they are not doing well, they do not have to try and come up with $300 or $1300 to pay into their savings to meet their goal, instead the amount they save corresponds with the amount they earn.
If you want to work off a percentage based budget you just have to figure out the minimum amount you make each month, and set your fixed bills percentage off of that minimum amount, so if you make $2000 a month, and your set bills including house, utilities, insurance, etc. is $1200, then make sure you set your percentage at 60%. Then on months you do well, you save extra by having more available for set bills, and not needing it.
