Budgeting According to Your Salary
To have a comfortable financial life, you need to have a good budget – otherwise you will find yourself spending far more than you can possibly afford. This will lead you into tricky situations and generally make your life less than fun. But budgeting is not the same for everyone, and someone hauling down six figures will run their life differently than one who is living pay-check to pay-check.
You need to budget according to your salary – to get started on this you should calculate how much you make after tax. Indeed, there’s no point spending based upon your listed salary as you may never see a significant portion of this income. The internet is full of tax calculators that can help you figure this out.
You also need to take into account any potential vagaries in your salary. For instance, people with sales jobs will be dependent on commission so they will have to be cautious, while bankers expecting big bonuses shouldn’t overspend lest these payments never materialise. The best way to do this is to set your budget based on your minimum salary – everything else is extra.
Above all be sure to be realistic about how much you make. It may be fun to jet around town acting like a big shot, but if you don’t have the salary to back it up you are best sticking to public transport. On the bright side, as you progress in your career you can gradually add little luxuries that will make life a bit more pleasant.
So when you confront the essential task of budgeting be sure to consider not only expenditures, but also how much you earn: this is the most important factor in how you plan your day-to-day financial life. Unless of course you win the lottery, then you can throw the budget out the window and just enjoy.