Your monthly income is the main source in the financial field for many people, and that is why it should be well-organized and split effectively in order to increase the chances of stability in your life. Even though it may seem simple for you to do, it is quite complicated when you get down to it. Usually, when people get their pay-check, they pay their bills, spend money on grocery, pay their debts, and they are barely left with something. In order to make sure your money last all month long, you should take into consideration a few handy tips.
First of all, what do you need?
The first thing to think about is what you need. Splitting your salary depends on your financial situation and living expenses, savings, loans, etc. You should start by creating a list of all your expenses in your month. Include things like:
- Rent or mortgage
- Car Insurance
- Car Payment
- Health Insurance
- Child Care
- Other Expenses
How can you split the money in the good way?
The next thing on your agenda is to think about how can you split the money? There is no way and no point actually to split them equally, so you will have to put more money in one department and less in another. So, how can you do the math to achieve an effectively split salary? Well, here is some guidance. The list is random:
- 3% of your salary should be spent on transportation costs
- 30% of your salary should be spent on mortgage or rent
- 15% of your salary should be split into other expenses, such as gifts, entertainment, hobbies, clothing, concerts, etc.
- 15% of your salary should go to your retirement fund or should be for savings
- 13% of your salary should be spent on food; this can include eating out or buying food for home
- 8% of your salary should be spending on credit card payment, loans, etc.
- 7% of your salary is meant for utilities
- 5% of your salary should go in the health care department
- 4% of your salary should be for vacations
Difficult but important
Therefore, splitting your salary effectively can be a difficult thing and there is no fun way to do it, but it must be done, so you should get to work and follow up these very useful tips because they will lead you to spending your salary in a smart way, without leaving anything behind!