We hear it every day that we should budget. Budgeting is important. It helps you organize.
Budgeting is nothing but keeping track of your money. Where and how your money should spend.
It is important for those how are extravagant. They spend furiously on the things they do not need much.
Budgeting is also important if you want to be a financial success in life.
If your budget regularly and with discipline, it can make you financially free.
You have heard many things about budgeting.
Keep track of your income and expenses. Always lower your expenses so that you will have more money saved.
This idea is important. It is helpful for you.
Keep track of all your income source is important. This can help you find your Net Worth.
Today I will discuss your budgeting in the form of the bucket. I called it the Budgeting Bucket Formula.
In this, I will show you how you can divide your income into different buckets. And why is important for you?
It can help you allocate your fund for different use
Your saving and investment become automatics.
You are now more organized.
I can help you reach your financial goals
The budgeting bucket has 6 buckets in it
1 Necessity bucket
This bucket is for your necessary expenses. In these necessary expenses, you include your rent, gas bills, daily utilities, your children’s tuition fees, transportation cost, etc.
This bucket should consist of 50% of your total income.
2 Investment bucket
This bucket is for your saving and investments.
You can also call this bucket “ pay yourself bucket”.
This is one of the most important budgeting for you. This bucket is the most important bucket for you.
This is responsible for your financial future. Open a separate account for your investment bucket.
You can use this bucket for your investment real estate, stocks, and mutual fund.
Why the investment bucket is important?
Through investment, you can grow your money. Here your money is working for you.
You should try to put always the maximum amount in this account.
Make it discipline to put at least 15% into your investment bucket.
3 emergency bucket
This bucket for your emergency. Saving for emergencies is like saving for rainy days.
Never touch your emergency fund unless it is really an emergency.
Your emergency bucket should of 10 % of your total income.
4 enjoyment bucket/ fun bucket
You are entitled to the good things in life. This is your fun bucket.
Use this bucket for the thing you want for yourself. Like going for the vacation. Or you can buy yourself an iPhone.
Don’t spend more than 10% on your enjoyment bucket.
5 Retirement bucket
We over prioritize our short term goals and prioritize our long term goals.
Your retirement is your long term priorities.
It is not you will not retire, or you don’t want to retire.
When you get old your body will not able to work more, your need to take rest formwork.
You should plan for your retirement.
You can put your 10% in any of your retirement accounts. You can also put your money in any retirement schemes like NPS, PPF, etc.
6 charity bucket
Lat bucket is your charity bucket.
This can be very unusual for you. But this is important that you pay back to society.
Always help those who can not help themselves. If you can get a lot more than you give.
Most of the people say we don’t have money to do charity.
You will never have money unless you make your mind to do so. You start doing charity when you have little money.
Allocate at least 5 % to charity every month.
By helping others you are helping yourself, you are making your inner-self happy.
Budgeting is not rocket science. Everyone is capable of budgeting their money. One thing you need is discipline.
This 6 budgeting bucket formula helps you budget your money.