Saving money is a great first step to achieving financial stability and reaching your financial goals. But saving money can be a difficult task. For most people, it’s easier said than done. The many variables involved to regularly save money and better yet investing your hard earned money. Can make balancing your checkbook difficult. Read on to learn how to create a monthly household budget that will leave you with extra money at the end of the month.
Use This Checklist To Create A Monthly Household Budget Plan To Save Money
10 steps to a successful monthly budget
- Determine your monthly income: Start by calculating your total monthly income, including your salary, any additional sources of income, and any government benefits.
- List your expenses: Make a list of all your monthly expenses, including rent/mortgage, utilities, food, transportation, entertainment, debt payments, etc. Try to be as detailed as possible.
- Categorize your expenses: Divide your expenses into categories such as housing, food, transportation, etc. to see where your money is going.
- Set spending limits for each category: Based on your expenses, set spending limits for each category. Make sure you allocate enough money for essential expenses like housing and food, while trying to reduce expenses in non-essential categories like entertainment and dining out.
- Track your spending: Keep track of your spending to make sure you stay within your budget. You can use a budgeting app or a simple spreadsheet to keep track of your expenses.
- Use a budgeting app: There are many budgeting apps available that can help you track your spending. Some popular options include Mint, Personal Capital, and YNAB (You Need A Budget). These apps allow you to link your bank accounts and credit cards, categorize your expenses, and track your spending in real-time.
- Write down your expenses: You can also keep track of your spending by writing down every expense you make in a notebook or a paper ledger. This can be a helpful way to stay aware of your spending habits and make changes as needed.
- Use cash: Using cash for everyday purchases can help you keep track of your spending since you can physically see how much money you have left in your wallet.
- Review your statements: Review your bank and credit card statements regularly to see where your money is going. This can help you catch any errors or unauthorized charges, and ensure that your spending is in line with your budget.
- Create a spreadsheet: You can also create a simple spreadsheet to track your spending. This spreadsheet should have columns for the date, the category of the expense, the vendor, and the amount. You can update the spreadsheet regularly and use it to see where your money is going.
How To Create A Monthly Household Budget Using A Spreadsheet
A spreadsheet is one of the best tools for tracking your monthly budget and keeping your finances organized. Here’s how to create and use a spreadsheet for your budget:
- Choose a spreadsheet program: There are many spreadsheet programs available, such as Microsoft Excel, Google Sheets, or Apple Numbers. Choose the one that works best for you.
- Set up your budget categories: Start by creating a list of all your monthly expenses, including housing, food, transportation, entertainment, etc. Then, divide these expenses into categories.
- Create your spreadsheet: Open a new spreadsheet and create columns for the following information: Date, Category, Description, Amount, and Running Total.
- Enter your expenses: Enter your expenses in the spreadsheet, starting with the most recent transactions. For each expense, include the date, category, description, and amount. You can also add a note in the description column to provide additional context, such as the purpose of the expense.
- Calculate your running total: Use a formula to calculate the running total for each category, so you can see how much you’ve spent in each category so far in the month.
- Update your spreadsheet regularly: Update your spreadsheet at least once a week, to keep it current.
Use your budget spreadsheet to see where your money is going and identify areas where you may be able to cut back on spending. This information can help you make informed decisions about your finances and stick to your budget. By using a spreadsheet to track your monthly budget. You can get a better understanding of your spending habits and make changes as needed to reach your financial goals.
Adjust your budget as needed: If you find that you are overspending in a certain category, adjust your budget accordingly. On the other hand, if you are consistently under-spending in a category. Consider reallocating that money to your savings or investing it.
How To Create A Monthly Household Budget With Money Left To Invest
Financial stability means comfortably having enough money to pay for your monthly expenses regularly. Not only that, but having an emergency savings fund built up and enough money at the end of the month to invest as well.
Put your money to work for you. Investing extra money is a smart way to grow your wealth and reach your financial goals. Here are some great ways to invest your extra money:
Stocks: Investing in individual stocks or a stock market index fund can be a great way to grow your wealth over time. Stock investments come with the risk of market fluctuations, so it’s important to have a long-term investment horizon and to diversify your portfolio.
Bonds: Bonds are debt securities that pay a fixed rate of interest over a set period of time. Investing in bonds can provide a more stable source of income than stocks and can be a good choice for individuals who want to reduce the risk in their portfolio.
Mutual Funds: Mutual funds are investment vehicles that pool money from many investors. To purchase a diversified portfolio of stocks, bonds, or other securities. Investing in mutual funds can be a good way to diversify your portfolio and get exposure to a broad range of investments.
Real Estate Investment Trusts (REITs): REITs allow you to invest in real estate without actually buying property. They are typically focused on income-generating properties such as apartments, office buildings, or shopping centers.
Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds in that they provide exposure to a diverse range of investments. But they trade like stocks on an exchange. ETFs can be a good option for individuals who want to invest in a specific market sector or asset class.
Retirement Accounts: Investing in a retirement account, such as an IRA or a 401(k). Can be a great way to invest your extra money and save for the future. Many retirement accounts offer tax advantages, and the money invested in these accounts can grow tax-free until you withdraw it in retirement.
Retirement accounts offer several tax advantages that can help you save for the future and reduce your tax bill.
Some of the key tax advantages of retirement accounts include:
- Tax-deferred growth: With a traditional IRA or 401(k), your contributions are made with pre-tax dollars. Which means you won’t pay taxes on the money until you withdraw it in retirement. This allows your savings to grow tax-free over time, potentially increasing your retirement nest egg.
- Tax deductions: Contributions to a traditional IRA or 401(k) may be tax-deductible, which can lower your taxable income and reduce the amount of taxes you owe.
- Tax credits: Depending on your income and contributions. You may be eligible for tax credits for contributions to certain retirement accounts. Such as an IRA or a Simplified Employee Pension (SEP) plan.
- Tax-free withdrawals: With a Roth IRA, your contributions are made with after-tax dollars, but your withdrawals in retirement are tax-free. This can be a great option if you expect to be in a higher tax bracket when you retire.
- No Required Minimum Distributions (RMDs): With a Roth IRA, there are no RMDs, which means you can keep the money in the account for as long as you’d like without having to take distributions.
- Penalty-free withdrawals: In some cases, you may be able to make penalty-free withdrawals from your retirement account before age 59 and a half, such as for certain hardship circumstances or to buy your first home.
Overall, retirement accounts can provide several tax advantages that can help you save more for the future and reduce your tax bill. Just be sure to consider the contribution limits, rules, and restrictions for the various types of retirement accounts. Before choosing one that’s right for you.
These are just a few of the many investment options available. It’s important to do your research and seek the advice of a financial advisor to determine the best investment strategy for your individual needs and goals.
How To Create A Monthly Household Budget With Automated Savings
Set up automatic transfers from your checking account to your savings account so that you can save money without thinking about it. Automating your savings by setting up a regular transfer from your checking account to a savings account can have several benefits, including:
Convenience: Automating your savings makes it easier to save consistently, as the transfers occur automatically without any effort on your part.
Increased Savings: Automating your savings can help you save more, as the regular transfers to your savings account become a habit. You may be more likely to save more if you have less access to your savings. As you won’t be tempted to spend the money.
Better Money Management: Automating your savings can help you manage your money more effectively, as you’ll have a better understanding of how much you can spend and still reach your savings goals.
Avoid Overdraft Fees: By automating your savings, you can reduce the risk of overdraft fees. As you’ll always have enough money in your checking account to cover your expenses.
Reach Your Financial Goals Faster: By automating your savings, you can reach your financial goals faster. Such as saving for an emergency fund, a down payment on a house, or a vacation.
Peace of Mind: Knowing that you’re saving consistently can give you peace of mind. As you’ll have a better understanding of your finances and be more confident in your ability to reach your financial goals.
Overall, automating your savings can be a great way to simplify your finances and make it easier to reach your financial goals. Just be sure to choose a savings account with a good interest rate and low fees. So you can make the most of your savings.
Investing Made Easy
Robo-advisors are online investment management services that use algorithms to manage your investments. They can be a good choice for individuals who want a hands-off approach to investing. And are looking for a low-cost way to invest in a diversified portfolio.
Finding a robo-advisor is fairly simple and straightforward. Here are the steps to follow:
- Determine your investment goals: Before you start looking for a robo-advisor, it’s important to determine your investment goals. This includes deciding on the amount of money you want to invest. The type of investments you’re interested in, and the level of risk you’re comfortable with.
- Research different robo-advisors: There are many different robo-advisors available, each with its own unique set of features and benefits. Start by researching several different robo-advisors and compare their services, fees, and investment offerings.
- Check for regulatory credentials: Make sure the robo-advisor you’re considering is regulated by a reputable financial regulatory agency. Such as the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA).
- Read customer reviews and testimonials: Look for customer reviews and testimonials from individuals who have used the robo-advisor you’re considering. This can give you a better understanding of their experiences and help you make an informed decision.
- Compare fees and investment minimums: Different robo-advisors have different fees and investment minimums, so be sure to compare these carefully. Some robo-advisors have no minimum investment requirement. While others may require a substantial amount of money to start.
- Consider customer support: Robo-advisors vary in terms of the level of customer support they provide. Some offer 24/7 support via phone, email, or live chat. While others may only offer support during limited hours or through email.
- Open an account: Once you’ve found a robo-advisor that meets your needs and preferences, you can open an account and start investing. The process is typically simple and straightforward, and can be done entirely online.
Here are some of the top robo-advisors in the market:
Betterment: One of the largest and most well-established robo-advisors. Betterment offers a range of investment portfolios, including tax-loss harvesting and socially responsible investing options.
Wealthfront: Wealthfront offers low-cost investment portfolios, as well as advanced financial planning tools. Such as direct indexing and free financial planning for clients with over $500,000 invested with them.
Charles Schwab Intelligent Portfolios: A robo-advisor offering from one of the largest financial institutions. Charles Schwab Intelligent Portfolios provides low-cost portfolios and cash management services. Along with 24/7 access to a financial advisor.
Vanguard Digital Advisor: Vanguard is a well-known investment firm, and its robo-advisor offering provides low-cost portfolios and access to a team of financial advisors.
Fidelity Go: Fidelity’s robo-advisor offering provides low-cost portfolios, along with personalized financial planning and access to human advisors.
Ellevest: Ellevest is a robo-advisor focused on investments for women, offering low-cost portfolios, financial planning, and access to human advisors.
SoFi Invest: SoFi offers both robo-advisory services and human financial planning. Along with a range of other financial services, such as student loan refinancing and personal loans.
TD Ameritrade Essential Portfolios: TD Ameritrade’s robo-advisor offering provides low-cost portfolios and access to human advisors, along with a range of other investment products and services.
These are just a few of the top robo-advisors available in the market. It’s important to research and compare different robo-advisors to find the one that’s right for you and your investment goals.
Finding a robo-advisor that’s right for you requires research, comparison, and careful consideration of your investment goals and preferences. By following these steps, you can find a robo-advisor that will help you reach your financial goals and achieve your investment objectives.
By following these steps, you can create a monthly household budget plan that will help you save money and reach your financial goals. Investing some of your hard earned money will in turn put your money to work for you. Resulting in passive income that will ultimately help you attain financial freedom!