You want to be as successful as Beyonce. Right, sis? Well, let me tell you a bit about her. Back in her Destiny’s Child days, she was already taking charge of her own money. She was young, famous, and making bank. But she was able to practice self-control.
And as she was growing as both an artist and person, she still kept the same mentality towards money – that you had to have a plan for it.
That’s why you need to know how to create a budget and the budget categories that are needed to make it an effective tool. Because a budget is exactly that: a plan for your money. You have to stick to it not only to survive but to live your best life.
When I first started learning about personal finance, I didn’t know how to budget properly.
I set aside too much money for things that I wanted (and told myself I needed) and ended up not having enough for the real essentials.
Also, I didn’t include the right budget categories so I was not tracking my money and started to fall back on bad spending habits.
But let me help you not make those same mistakes. Here are the five absolute must-have budget categories (including percentages of your budget) for living the dream!
It’s what every human being can’t live without, so it’s no wonder that it’s the first thing on the list. But that doesn’t mean you have to spend so much money on it. Limiting your GrubHub orders and, as delicious as those fries may look, saying no to expensive side dishes are just two ways you can cut your food expenses.
Of the many different categories in my budget, this is where I spend the most. We spend a third of our lives asleep, and it’s important to feel secure while doing so.
It’s also important to think of both of these two together. After all, what good is a roof over your head in today’s world if you don’t have internet, electricity, or running water?
You might think that you don’t need health insurance and medicine. Until you do.
Medicine is a safety net that will make sure that if and when your body gives up on you, you’ll still be able to function. After all, you wouldn’t want to get sick right before that big presentation, right?
Savings and investments might not be what you expect to see in a list of the most important budget categories, but they are there to help you grow your wealth. Budgeting some money towards these means putting off instant gratification for the sake of achieving your long-term goals.
Investments aren’t just stocks, bonds, and crypto either. They’re things that can help you earn (or save) more money in the future. For example, spending money on a skills course could get you a higher-paying job.
There’s a reason that YOU are one of your most important budget categories.
Living life without spending at least a bit of money on yourself, isn’t really living at all. I mean, who doesn’t look forward to their monthly StitchFix delivery? Spending money on the things we want reminds us why we keep grinding every day.
But while treating yourself is important, it’s not essential; which means you don’t need it to survive. As important as your wants are, you need to prioritize paying for rent, food, and other necessities. Once all your needs are met, then by all means pamper yourself with a massage, mani-pedi, or a shopping spree.
In order to set up your budget, you must know how much you earn each month along with how much you spend. The easiest way to start is to find a budgeting app where you can automate your transactions and expenses that are linked to your banking account.
Once you have selected your budgeting app, here’s all you do to categorize your transactions:
There are so many ways you can budget your lifestyle to achieve your ultimate goal of saving more money and tracking your expenses. Here are some of the popular ways to budget your money:
A balanced budget is achieved when you spend less than what you earn. If you are spending more than you earn, you are creating more debt and other negative consequences within your budget.
Ultimately, you want to works towards having a surplus within your budget. This occurs through consistency in budgeting and reducing your overall expenses.
And those are what I think are the absolute must-have budget categories. But a budget is only good if you stick to it! It’s now on you to make sure that you’re following the plan that you’ve set for yourself, sis. I trust that you will.
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Dollars Makes Cents by Shaquana, Financial Coach and Wealth Expert, resources helps professional millennial women of color with the tools and skills they need to eliminate their debt, amplify their savings, and build generational wealth — without having to compromise their lifestyle.
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