Budgeting is an important part of securing your financial future. While the word “budget” often has a negative connotation, in reality, it’s a positive. At Key Credit Repair, we’ve found our clients who set up a way to effectively manage their money are able to pay their debt down and not feel financially strapped.

Done efficiently, budgeting doesn’t mean you can’t spend money, but it is a great mechanism to help efficiently manage your money so you can achieve financial freedom more quickly. Here are five ways to plan an efficient budget.

1. Start with the Essentials First
When structuring your budget, list your essentials first. These include housing, food, utilities, transportation, and insurance (car, health, and home), childcare, and minimum debt payments. Once you have these accounted for, begin to add in less important or discretionary spending categories.

2. Plan to Pay Down Debt
Paying down debt is a huge step towards financial freedom, even if you can only pay a little above your minimum balance every month, do it! You’re not going to get ahead by making a minimum payment, but proactively paying more makes being debt-free that much more achievable.

3. Utilize the 50/30/20 rule
The 50/30/20 rule is an easy budgeting approach enabling you to efficiently manage your money. How it works is that you divide your monthly after-tax income into three categories:
50% for needs
30% for wants
20% for savings or paying down debt
This is only a general structure, but it’s a good guideline. If you want to pay down debt or build up savings more quickly, you can always shift money from your “wants” into your savings/paying down debt category.

4. Find Ways to Cut Spending
Cutting out the excess can be difficult because separating needs and wants isn’t always cut and dry. After outlining the essentials, see if anything can be cut. If so, shift those funds to your 20% bucket to boost it to help get you that much closer to your goals. Good categories to look at include entertainment, take-out, subscriptions, memberships, travel, and other items that may be more flexible than you initially think.

5. Track Your Progress
A budget isn’t a set and forget type of process, it’s important to consistently track your progress and see how your bottom line is doing. There are many great online tools that can help you do this. If it’s not as strong as you’d hoped, revisit your budget and make tweaks as needed to give you a nudge in the right direction.

The key to efficient – and successful – budgeting is to be realistic. Budgeting can be hard and make you feel as if all the fun has been eliminated. However, with planning, along with sensible financial decisions, you can most likely leave some wiggle room to splurge from time to time. Just keep your eye on the end game, which will leave you with a lot more discretionary spending.
Another big part of achieving financial freedom is to fix your credit. Contact Key Credit Repair today for a free consultation at 877-842-5215!





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