You’ve got a new job offer, and you’re excited about the salary and benefits package. But before you start spending wildly, you should take some time to plan out your budget.
How much do you spend each month on food, rent, utilities, transportation, etc.?
Or alternatively, you have taken a dip in your salary.
Unfortunately, if you don’t earn the same amount that you used to, you will have to have a look at your spending habits and make some adjustments so that you do not run into any financial difficulties later down the line.
Budgeting is essential for anyone who wants to save money, regardless of whether you are earning more or less than you used to!
Read on to find out how to create a budget for a $30k salary that allows you to live comfortably whilst also giving you some breathing room for an emergency fund, or savings for the future.
Track Your Spending
Take a look at your current spending habits:
Why Is Tracking Spending Important?
One reason why tracking your spending is important is because it helps you identify areas of your life where you could cut back.
If you don’t track your spending, you won’t realize which areas are costing you money.
For example, if you spend too much on eating out at restaurants, you might decide to stop going out altogether.
Or maybe you find yourself buying expensive clothes without really thinking about whether they fit in your wardrobe.
The key thing to remember is that you shouldn’t try to change your entire lifestyle overnight. Instead, take small steps toward saving money.
What Are Some Ways To Track Your Spending?
Tracking your spending doesn’t necessarily mean writing everything down. In fact, there are many different ways you can do this.
Some people choose to write their expenses down on a piece of paper and stick them in a notebook. Others prefer to use a spreadsheet program such as Microsoft Excel.
Whatever method you choose, the main idea is to ensure you accurately record your spending.
This includes:
- What you buy
- Where you shop
- How much you spend
- When you spend it
Once you have recorded these details, you’ll be able to easily calculate your average monthly expenditure
Setting Up A Budget
Before you start creating your budget, make sure you understand your numbers.
It’s not enough to simply assume that you’ll be able to save money every single month on a $30 000 a year salary. You need to understand what you actually spend each month.
To begin, go through all of your bills and expenses.
This includes utility bills, phone bills, car payments, credit card bills, mortgage payments, student loans, insurance premiums, groceries, gas, clothing, entertainment, and anything else that you pay for regularly.
Once you have a list of everything you spend money on, calculate how much you spend on these items each month.
Make note of any recurring expenses such as your cable bill, transportation costs, or gym membership. Don’t forget to include any additional costs such as parking fees, tolls, etc.
If you spend more than you earn each week, you will quickly run into financial problems.
You may even be forced to borrow money from friends and family just so you can keep up with your expenses.
If you spend less than you earn each week, then congratulations! You’re already ahead of most people. However, you still need to set aside money for future expenses.
Allocating Yourself Some Money For Fun
Budgeting isn’t all about restricting yourself! With a $30 000 a year salary, you should allow yourself to have some fun with your money too!
Make an allowance every month for trips to town, days out, or movie nights- whatever you enjoy the most, make a space in your budget for it.
You may find that you’d rather cut down on other elements of your budget such as your grocery bill or get a cheaper phone contract if it allows you more space in your budget for things that you find more important, such as a nice getaway every once in a while.
As long as you plan in advance, you’d be surprised how much you can fit into your budget if you cut back on other things in your life- by making sure you are looking to the future, you won’t be caught with any nasty surprises when you do inevitably want to treat yourself.
Understanding Your Numbers
Now that you’ve got a basic understanding of where your money goes each month, you can start calculating how much money you want to save each month.
It’s also important to realize that though you may be on a $30 000 a year salary, does this include the chunk of money that will come out for federal income taxes or not?
Before you even begin with creating a budget, find out how much money you actually have out of your annual income after tax.
The Importance Of A Zero Balance At The End Of Each Month
Another reason why tracking your spending matters is that it allows you to see exactly how much money you have leftover each month.
In other words, having a zero balance at the end of each month means you haven’t spent any of your savings yet. So you have plenty of room to save more money next time around.
It also shows you how much money you have left over after paying off all of your essential bills or outstanding debts.
To avoid getting into additional debt, your monthly budget must be lower than your monthly income.
When you first get started saving money, it’s best to focus on building up an emergency fund.
Once you have saved up some money, you can start using it to pay down debt if you have things you’d like to clear.
How Much Money Should I Save?
There is no right answer here. It depends on what your goals are.
If you only plan to save enough money to cover emergencies, then you should probably aim for between $100-$200 per month.
However, if you would prefer to build up a large amount of extra cash, you can save more than $300 every month.
Either way, you should always make sure you are saving around 10% of your income.
This is universally considered a good rule of thumb to stick to so that you don’t get caught out with any unexpected financial payments that come up during the year.
Final Thoughts
By following these tips and tricks, you should be able to live a comfortable lifestyle on a $30 000 annual salary.
Firstly, work out the real amount of money you earn after tax, minus all of your essential cost of living, such as bills, utilities, social security, and food.
Once you know your monthly expenses, you can divide the rest into expendable money that you can enjoy, and savings towards any future goals or emergency funds.
Financial Disclaimer
This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.
The investing information provided on this page is for educational purposes only. compundingstacks.com does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks or securities.
The owner(s) of this blog is compensated to provide opinion on products, services, websites, and other topics. The owner(s) may be compensated if you click on a provided link and purchase or sign up for a service. Any product claim or advice about a product or service should be verified with the manufacturer, provider, or party in question. Copyright Compounding Stacks © 2022
Everyone wants to make more money - but how many people actually put the time and effort into researching how to do this? Not many. The fact that you are here on my website right now proves that you are one of the few who actually has what it takes to invest their money correctly to get the most back.
- Is Coinbase Safe For Beginners? - March 25, 2022
- Are Penny Stocks Good For Beginners? - March 25, 2022
- Why You Shouldn’t Save Your Money In A Bank? - March 25, 2022