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Budgeting Your New Life for Your Dream Life

Door to new world

Are you a recent grad looking ahead at a life full of opportunities but feeling overwhelmed by your own goals and dreams? Don’t worry, you are not alone. Financial goals never look easy. However, this doesn’t mean they are impossible to achieve. Some careful planning, intelligent budgeting and wise spending make every dream a reality!

 

Budgeting is the most necessary step for any recent grad looking to get out of debt, establish a good credit score, buy own house and car and gain financial freedom. Budgeting allows one to monitor the earning and spending, shift and adjust the spending patterns accordingly, pay off debt faster and increase savings.

 

Start Budgeting Today

First of all, pen down the goals you wish to achieve in the next 5-7 years. Make sure that each and every goal is well-defined and measurable in terms of the money that it will require. In order to start budgeting, take a pen and paper and create a budget template. A basic budget template includes your weekly/monthly earning from different sources and corresponding expenditure divided into major categories such as house rent and maintenance, utilities, food, entertainment, shopping, credit card bill payments etc. This helps you discover the areas where you can spend more wisely and save more as a result. You can also fix an allowance for each expenditure category to stay disciplined and ensure regular savings.

 

Becoming Debt Free

Getting out of debt can be the most rewarding step towards achieving your financial goals. No debt automatically translates into bigger savings and lesser stress. In order to become free from debt, allocate a fixed percentage of your monthly income towards paying off debt. It should be no more than 30-40 per cent of your gross income. Also, make sure you make timely payments of your credit card bills.

 

Buying Car and House

Buying a car always seems easy as no down payment is required. However, it’s always better to make some down payment so that you don’t end up paying much more than what the car is worth. Also, make sure you buy a car that fits your lifestyle and your budget. You need to factor in maintenance costs, auto insurance, parking costs etc. while deciding the car you would buy. Always remember, your first car is not going to be your last. So don’t go overboard by buying a luxury car that lands you in a debt trap. You can also discuss your budget with the sales person so that the interest rate and the payment term are adjusted to match the amount you can pay monthly.

 

Buying a house on the other hand is much harder. Buying a house entails expenditures such as monthly mortgage payments and house maintenance costs. Hence, you need to ask yourself if you honestly think you can afford it in the next 5 years. If yes, you will have to do some serious saving in order to accumulate the money for the down payment. This would mean sacrificing some luxuries and spending more frugally. Apart from deciding on a fixed amount of saving every month, you may also want to look at generating an additional source of income in order to boost your savings for your home.

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