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In order to save money, you must create a monthly budget that works for you. Some experts recommend a 50/20/30 method. This involves spending 50 percent of income on essential needs, 20 percent into savings and 30 percent on lifestyle choices. Regardless of how you divide your income, you must make sure that your monthly budget covers all of your needs.

Housing And Utilities In Your Monthly Budget

The first thing to consider when planning your budget is your housing. Obviously, you need to have enough money saved for your current living situation. If you own a home, that means making sure that you are paying your mortgage, homeowners insurance, property taxes, repairs and upgrades. If you are a renter, then you must pay your monthly rent and insurance. And in all cases, make sure you put money aside for utilities like electricity, gas, cable and water. Keeping a roof over your head is paramount.

Food And Medicine In Your Monthly Budget

After taking care of housing, you budget should address food and medicine. You need to keep track of all of your spending on food and determine ways to save some money. For example, buying groceries and eating in could net you more savings than going out to eat at a restaurant. Make sure that you have a manageable monthly food budget and try to stick to it. You should also monitor medical spending and set aside funds for it.

Transportation In Your Monthly Budget

Transportation is the other major essential part of a monthly budget. For some people, that means either saving for a new car or paying for a car that they already own. If you own or lease a car, then you must also set a side funds for insurance, gas, tolls and repairs. Depending on where you live, you could sell your car and use public transportation as a way to save money.

Savings In Your Monthly Budget

Even if you have a stable job, you need to develop a savings pattern. A certain percentage of your monthly income must be devoted to savings. First, you must have an emergency savings fund — which is usually in your bank — of three to six month’s worth of expenses. Then, you must begin investing. Specifically, put your money in tax-friendly accounts such as 401(k)s, IRAs and HSAs.

Tracking Your Monthly Budget

Finally, to make your budget work, you must keep track of all spending. Some people use an excel budget to accomplish this. Other people make their own budget spreadsheet or they download a monthly budget template. Either way, keeping track of spending is the key to everything. By tracking all spending, you might be able to identify more ways to save money.