How to Budget When Earning a Higher Income
Securing your first real job is an exciting time in your life. Whether or not you are pursuing your desired career path, you are probably earning more money for the first time.
Despite the fact that you earn more, you shouldn't see this as an opportunity to spend more -- you should mentally prepare yourself to budget more wisely. Before you fall into bad habits, it's a good idea to contemplate some budgeting strategies that work for your new financial situation. It makes no sense to advance your career but still live paycheck to paycheck. You want to start budgeting your money so that you can accomplish things like paying off your debt, buying a home, traveling, and enjoying financial security.
Carefully calculate your gross income
How much are you actually taking home after taxes? Figure out how much this amount is, and then use that as a base for your budget. Calculate how much you make each month and break that down to a weekly number to help make your overall budget clear.
Once you have a solid idea of how much you make, adopt a budgeting rule. The 50/30/20 rule is a good one to follow. By following this rule you spend no more than 50 percent of your earnings on bills, groceries, and other essential expenses, no more than 30 percent of your earnings on leisure shopping, and also save 20 percent of what you earn.
Live within your means and plan ahead
More money is only a good thing if you truly manage it properly. You may be eager to get out of your home and finally settle into a place to call your own. Even though you may have fears related to finance, that should not hold you back.
Avoid giving into temptation just because you now make more money. A common problem many people have when earning a larger salary is that they feel comfortable spending. There is nothing wrong with spending more money if you can manage to live within your means. That means you should focus on things like paying down your debt and saving.
Above all else, budget to have fun
Your new job should open doors for you to have fun without breaking the bank. When people hear the word budget they think there is no fun associated with it, yet you can still have fun, while sticking to a budget.