Can you reduce your weight in just six minutes? Well, it is hard to say. However, talking about the budget, well you can have a solid one just in six months. A major challenge with proper budgeting is that, it has to become habitual in order to be effective.
You can survive without knowing how to budget if you can manage the money influx better than its out flux or maybe you can have a credit card to fill the gap, but this will not last longer. People often thus resort to budgeting after they get tired of dealing with income and expenses in a back-of-the-envelope way.
At the crux of six-month budget is the emergency fund. In the traditional way budgeting often starts with tracking expenses, reducing debts, once the budget is well-balanced, emergency fund is built. To speed up the process you can build a partial emergency fund. In that case, you must have few month wages in a liquid account to your surprise. This emergency fund will be buffered, putting in place the other budgets and should replace the use of credit cards for emergencies.
If you are living in a rented home and having just a modest amount of debt, an emergency of $600 will just be fine for you. Now if you are an owner of a house, a car then you will unexpectedly require car infusions, and your emergency funds need to big.
The main key to build an emergency fund is to devote a certain percentage of paycheck to it every month, if possible put in it whatever that you can spare. This will gear up the process and let you think about your spending.
We are talking a lot on emergency, well to clear the confusion of the readers let us throw a little more light on the basics related to- What is an emergency? Or how it works? Or why you need it?
You should use the emergency fund for proper issues like you drove to work but your muffler stays at home, or may be your water pipe suddenly had a leakage just when you were under the shower. You may keep another bank account, rather an online bank savings account, where you cannot access the account as easily and where you can get higher interest than a normal savings account.
While you need to save money if you have used the entire emergency fund clearing your credit card debt, well the purpose served by this fund is to make your credit card pay for the ugly things that life throws at you. If you have a proper emergency fund then you need not let you credit card float, if something goes wrong.
Resort to Downsizing and Find Substitutes
After getting a buffer between you and high interest debt, it’s the big time to start downsizing. A natural solution helps to create space between your expenses and income, the more income you will have to pay down your debt and invest at the same time.
You can also adept the process of substitution, like you have a gym membership worth $60, better cancel it and save to invest or pay down debt. Purchasing coffee from a fancy coffee shop every day is not a good option; rather you can buy a coffee maker. Substitution holds back the basics, while cutting down the costs.
Focusing On Rewards
Another trick to make your budget get consolidated in six months is to focus on the rewards. A mixture of long and short-term goals will help you to keep motivated this can be simple as saving for a small luxury to buying a Rolls-Royce.
Seek a New Source of Income
If you are able to increase your income, then getting a good budget for yourself in six months will be easily fulfilled. Once your budget is in place and have more money coming in than going out, you can start investing to create more income. It is better to have no debt before you begin investing.
It is possible to get a good budget in six months, but this depends on your financial situation and how or what type of debts you have if you can resort to manage your accounts finding the odds then you may find that improved budgets have immediate benefits.
Author’s Bio: John Riviera is an outreach consultant working with reputed contact center services that are known to deliver impeccable call center solutions. He is having vast knowledge on financial outsourcing that benefits a number of customers.