Budgeting is Personal Finance 101.
Just think about all the times you withdrew cash from the ATM machine or passed transactions from your credit card, so you had no idea where all the money went a couple days later.
One of the main reasons developers need a financial budget planner is that usually they do not save enough or more money and tend to mismanage their personal finances.
Besides, if you want to achieve financial independence and fulfill your dream (which, unfortunately, may cost money), you have to implement aggressive saving and effective budgeting plans.
Though your savings rate should increase, the more you make! To achieve that, you have to spend at a slower rate than the rate of your income increase.
Here are typically significant signs that you require a budgeting planner:
‣ You don't know how much you invest and what your returns will be.
‣ You don't have a clear investment strategy.
‣ You are not sure whether you are enough cash and whether you could save even more!
‣ You haven't set up your retirement plan.
‣ You have a goal that requires financial investments.
All in all, a personal financial planner will guide you in meeting your current financial needs and long-term goals. Moreover, your budget planner can help you reduce spending, pay off debt sooner, and save more to invest in the future.
Fortunately for developers, their finances are much simpler than by businesses and entrepreneurs, for example. That's why any developer can take a DIY approach to manage their finances by themselves!
💸 Pay-Yourself-First Budgeting
This is the practice of saving first (usually through an auto-deposit set up) and then freely spending whatever is left over each month. This one can be great if you:
Have high income but don't save much
Prone to impulse-spending
Are a first-time income earner
It is the go-to strategy in the personal finance world! This means automatically saving money from each paycheck first, before doing anything else.
When you start building your budget based on this method, it revitalizes your entire view on finances and gives you more financial confidence.
So, that you will be in control of money, instead of money will be controlling you.
📊 Use the 50/30/20 rule
This rule works by breaking your spending into three key categories:
50% - Needs: essentials that you must pay each month.
30% - Wants: budget for anything you non-essentials you want.
20% - Savings: money you are putting toward your financial goals.
It means you don't have to stress about having a specific budget for "grocery" or "clothing" or "entertainment" anymore!
Here is the simple code to calculate it:
const calculateBuget = (afterTaxIncome) => {
let needs, wants, savings = 0;
needs = afterTaxIncome * 0.5;
wants = afterTaxIncome * 0.3;
savings = afterTaxIncome - needs - wants;
let result = "Needs: " + needs + "$," + " " + "Wants: " + wants + "$," + " " + "Savings: " + savings + "$";
return result;
}
calculateBuget(3200);
When you budget with the 50/30/20 rule, keep in mind that you need to focus on your after-tax income—netto income.
It's a smart way of personal budgeting finances, which is actually a pretty good way of categorizing your money, but...
Is this ratio realistic for you?
Priority would be to take care of necessary expenses or "needs" first, and in some cases, these bills may go well over >50%. So, you will need to adjust your ratios to what is realistic for you at first!
Next, you have to be totally honest with yourself and decide what can and should be eliminated, changed, and lessened to lower expenses. Because how you will adjust your ratios and shuffle your money around is entirely up to you.
You can learn about the 50/30/20 rule here.
💰 Have a daily spending limit
I am one of many others that had a bad budget control habit in general, and the worst—the daily one in the past.
Every month I found myself short.
After searching and follow many strategies without any real stable long results, I came up with the solution for my first problem — set up my daily spending budget for the month!
The main idea is to divide the budget into a certain number of days. Let's say my budget is 1000 Euro (apart from the rent) every 30 days. That means my daily spending limit will around ~33 Euro every day.
Any day I spend more than the limit, the difference will come from the rest days equally.
🎯 Set financial goals
It can be anything from paying off a credit card debt to saving up for a new car.
Once you have a real goal in mind, you can start working on making it come into reality.
Here comes a creation of a personal budgeting plan, setting priorities, and sticking to it. Planning in advance and following your plan on personal finance will help you avoid unnecessary purchases. Whenever you are about to spend money, you would automatically question yourself whether it's within your budgeting plan or not.
"A journey of thousand miles begins with a single step."—Lao Tzu.
Once you start it, you would have to force yourself to be disciplined about it. Sometimes, you would even feel unpleasant to limit yourself on certain purchases that you are used to spending your money on.
But if you have a bigger picture in your mind with a sense that you are on the right way to achieve your financial goal, you will keep motivated and have its own reward over time.
I didn't know how to manage multiple goals and kept losing track of how much I saved and, most important for what 🤦♀️
For this reason, I have implemented for myself first yearly savings plan for my financial goals!
With my spreadsheet, you can track your savings goals and have a clear view of everything simultaneously:
‣ Control monthly contributions to each of your savings goals.
‣ Easily visualize how much you have saved and how much is left to save to achieve your financial goal.
‣ Check how much you have saved this year at first glance.
‣ Stay motivated to save more cash monthly.
You can also edit and reuse and upgrade your financial goal planning tool as many as times you want!
I know from experience this works. It always helps to have a priceless visual plan in front of you.
If you do this month after month, soon it will become a habit — a healthy habit which will set you up for your best life and financial goal achievement!
Get your financial goal planner here.
P.S. I am a huge coffee man who cannot start her day without a cup of coffee with the oak milk. If you like my yearly savings plan for budgeting financial goals, you can support and buy me a coffee.
Either way, no pressure, and thank you for your appreciation!
📈 Manage budgeting plan in spreadsheets
The truth is that creating a budgeting plan and following it consistently is the most challenging part!
Start with working out what you currently spend, and focus on the immediate budgeting changes you can make.
If you do this day in, day out, month after month, soon it will become a habit - a healthy habit which will set you up for life.
Create your own financial budgeting planner!
Update it daily.
If you have been withdrawn cash from an ATM today, how will you remember after a week has gone by, where the money was spent?!
For example, my budget planner for personal finances (a good old spreadsheet, which operations automated as much as possible) does the best job by:
‣ Providing a detailed spending breakdown
‣ Tracking my expenses
‣ Putting me in control of my household spendings
‣ Analyzing the results to help me control my monthly cash flows.
If you haven't started budgeting, there is no better time than today, like anything else, and get the financial budgeting planner, which I personally use now!
Just know what you have and not overspend!
Sometimes you might think that buying something small here and there will not hurt your budget. Still, when you add up everything at the end of the month, you usually see that all those "little things" have turned into one enormous big bill.
That's why a very helpful budgeting spreadsheet will enable you to see the problem and take the right action regarding your finances (of course, if you don't forget to put every expense into it).
What you earn will not make you rich, but what you save!
Because personal budgets are necessary to make the right financial decisions and make sure you have money when you retire or quit/lose a job. It's crucial to avoid losing it because of debt and insolvency. Money is a big deal in the world, and you work hard for it.