How to create a budget (even if you hate budgets)

Many people have never had a budget and also do not want one. But at the same time, they are worried they will not have enough money to retire. That is where a bit of logic comes in. Whether you like it or not, following a basic budget is the best way to live comfortably in retirement.

This does not mean that you necessarily have to record every penny you spend. Most people feel guilty about not having a perfect budget – and, in fact, everything is fine. It is much better to have a budget than to have none. But at least create a budget that divides fixed costs, including property tax, insurance, medical and basic (car, food, housing). In fact, each budget should split expenses into two columns:

1. Fixed and required expenditure

1. Fixed and required expenditure

These include things you must pay to survive:

– Housing
– Food
– Clothing
– Safe
– Medicines

2. Wishes

2. Wishes

This category is only for non-optional expenses – everything else needs to enter the second category. No exceptions.

Anything that is not integral to living and surviving goes to this second column – and everything in this column instantly becomes optional. Yes, this includes travel. No matter what your current financial situation is, it’s important to remember that just because you have the option of spending money on something does not necessarily mean it’s a good idea.

If you feel the need to track every penny as part of your budget efforts, you should go back three months and watch what you spent. If some expenses are paid only once a year, you can include them later. Most budget books encourage you to start tracking expenses from today, tomorrow, or early next month. These methods simply do not work.

Looking only at behavioral reasons, you’ll be wary of what you spend in the future because you want the expense sheet to remain “good”, only to get frustrated later because you feel restricted in spending your own money.

By looking at your past expenses

By looking at your past expenses

However, you can identify your buying impulses and reflect on whether they really paid off. Through this, you will develop better clarity about your financial habits and realize where you need or want to improve.

By dividing spending into two categories – absolute needs and separate wish list items – you will not compromise your financial future with the wish list. This really makes planning less stressful, and it also allows you to see if you have enough or not to save. This does not mean that you will be poor; This means that you need to address the wish list more strategically.

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