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<p>We all need money to pay for your housing costs, food, and warmth. Unfortunately, our salaries don’t always coincide with our needs and wants. Still, you probably know someone who is in a similar situation but somehow manages to make ends meet without much difficulty. The secret behind their seemingly magical success? Budgeting.</p>



<p>Once you understand how to budget, you can plan ahead for most of your expenses and <a href="https://www.riamoneytransfer.com/en/blog/save-money-on-tight-budget">find places where you can cut back</a>. It’s the best way to financially provide for yourself and your loved ones. Below, we walk you through four simple steps to start budgeting like a professional.</p>



<h2 class="wp-block-heading">1. How to create a budget and set out your regular expenses</h2>



<p>Your regular expenses are those you have to pay for every month, including:</p>



<ul class="wp-block-list"><li><strong>Housing costs</strong> &#8211; rent or mortgage payments, council tax, or service charges.</li><li><strong>Food costs</strong> &#8211; grocery shopping for food, drink, and household supplies.</li><li><strong>Utility costs</strong> – water, gas, and electricity bills.</li><li><strong>Transportation costs</strong> – be it a metro card, gas, or repairs for your bike.&nbsp;</li><li><strong>Insurance costs</strong> – recurring payments for health, life, car, or other insurance.</li></ul>



<h2 class="wp-block-heading">&nbsp;2. Calculate your total monthly income</h2>



<p>Your total monthly income is a combination of all your sources of revenue. This may be harder to keep track of if you do freelance work or depend on commission. If your income varies, start writing down any payments you receive for a few months. This way, you’ll be able to come up with an average.</p>



<p>Welfare benefits during unemployment, seasonal bonuses, and any side-gig income also count. &nbsp;</p>



<p>Once you’ve got your total, input that into a spreadsheet sheet along with your expenses.</p>



<h2 class="wp-block-heading">3. How to budget using spreadsheets</h2>



<p>We often use the word ‘Excel’ to refer to any spreadsheet. Generally speaking, a spreadsheet is any computer tool that organizes data into tables. This tabular format, seen in every budget planner worksheet, is composed of rows and columns that can help you better organize your expenses. Spreadsheet platforms include Microsoft Excel and Google Sheets. The latter is free to use, but does require creating a Google account.</p>



<p>There are many budget planner worksheet templates available. So you don’t have to create the budget template from scratch, you can download a free one <a href="https://www.sampletemplates.com/business-templates/sample-personal-budget.html"><strong>here</strong></a> and adapt it to your needs.&nbsp;</p>



<h2 class="wp-block-heading">4. Make your money work for you&nbsp;</h2>



<p>While there are many methods on how to budget out there, the <strong>50/30/20</strong> rule and the <strong>Zero-Budget</strong> rule are the most popular.</p>



<p>&nbsp;The <strong>50/30/20</strong> rule divides your income to cover three main expenses:</p>



<ul class="wp-block-list"><li><strong>50%</strong> goes towards your necessary living expenses: housing costs, electricity bills, food shopping, etc.</li><li><strong>30%</strong> is free for you to spend: you can use it to send money to your loved ones back home, buy clothes for a special event, or take your family out to dinner.</li></ul>



<p><strong>20%</strong> goes into savings: this money is intended to cover future costs such as a down payment on a house, a medical emergency, college tuition, etc.</p>



<p><strong>TIP</strong>: Check out these<a href="https://blog.riamoneytransfer.com/5-ways-start-saving-money/"> </a><a href="https://www.riamoneytransfer.com/en/blog/5-ways-to-save-money">five ways to start saving money</a> so that you don&#8217;t miss any useful tips.&nbsp;</p>



<p>The <strong>Zero-Budget</strong> rule involves allocating all of your income to your expenses until nothing is left&#8230; zero! Complete your budget spreadsheet one month in advance, and assign all of your income to the different categories. This method gives you more freedom as it doesn’t impose specific percentages. However, it does make it easier to slip on your savings. So be mindful to assign a realistic yet significant portion of your income to that category. </p>



<h2 class="wp-block-heading">Bonus budget tips</h2>



<p>Life is messy, and so are our expenses. Emergencies and other unexpected situations can easily lead our budget astray. To help you steer clear of spending more than you earn, here are four bonus tips on how to budget:</p>



<h3 class="wp-block-heading">1. Avoid credit cards to pay for things</h3>



<p>If you have a bank account, it may be wise to use your debit card to make payments instead of a credit card. Credit cards are good to have in case of emergencies, but we shouldn’t grow accustomed to using them. Why? Because we’ll end up generating more debt than we can pay, and the longer we take to clear our credit balance, the more interest expenses we’ll incur. &nbsp;</p>



<h3 class="wp-block-heading">2. Devise a pay-back plan before taking out a loan</h3>



<p>The idea of a loan—a large sum of money miraculously falling into your lap—can be quite attractive. However, we must be careful when taking out a loan. As with credit cards, you will have <strong>interest added</strong> to the amount you borrow, which could skyrocket if you miss a few payment deadlines.</p>



<p>Given that this is money you will have to pay back, with interest, you need to fit those monthly payments into your budget. For example, you can replace the amount you pay in rent for a mortgage payment, but you’ll need to make sure the mortgage is equal or inferior to your rent. Otherwise, you’ll need to reorganize your budget.</p>



<h3 class="wp-block-heading">3. Use smartphone budgeting apps</h3>



<p>When you&#8217;re out and about during the day, you will need a tool at hand to track your expenses in real-time. There are several smartphone budgeting apps that can help you log purchases and stay on track of your budget.</p>



<p>Apps available for iOS and Android devices include: <strong>Mint, EveryDollar, PocketGuard, ClarityMoney, and GoodBudget</strong>. And, of course, if part of your budget includes putting money aside to send home, Ria Money Transfer App can help you with that.</p>



<h3 class="wp-block-heading">4. Stick to your budget</h3>



<p>It takes drive and determination to learn how to budget and, most importantly, to stick to a plan. Reviewing your budget at least twice a month will help you stay committed. You’ll have greater peace of mind knowing that you can meet your monthly costs and protect the ones you love.</p>



<p>Explore any other online tools to help with your budgeting efforts. Don&#8217;t worry if you come across some financial terms you don&#8217;t know. Once you&#8217;ve read these <a href="https://www.riamoneytransfer.com/en/blog/15-financial-terms-to-know">15 Financial Terms You Should Know</a>, you&#8217;ll be able to comfortably navigate any budgeting resources online.</p>



<p>By following these four simple steps, you&#8217;ll be in better shape to manage your expenses. Plus, if you adopt the bonus budget tips above, you can kickstart your personal finances today.&nbsp;</p>



<p><strong>Ready to send money? <a href="https://riamoneytransfer.app.link/Ju3RpE6jcib">Download our Ria Money Transfer app</a> for iOS or Android today to get started</strong>!</p>


Illustration of a person standing next to a large table, organizing oversized paper currency. There is an open box on the table containing coins and neatly stacked bills, symbolizing financial management or how to budget effectively.

How to Budget Your Way to Financial Independence

About the author

Gabrielle van Welie

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