I have never identified with the memes of “not making it to the end of the month”, and I don’t say it to show off, just to make clear why it is important to make a monthly budget. I have done it since I left college and so far it has worked very well for me; over time it has been adapting to my needs but I have always been consistent. The memes thing might seem like a joke, but behind it lie a lot of anxious and stressed people because they do not manage good personal finances.

The monthly budget is a table in which, at the beginning of the month, you allocate a percentage of your income to different things, then during the month you adjust to that percentage. The percentage is different for every lifestyle, but I started with what I consider a good starting point and it helped me a lot to keep good finances and avoid stress, it’s like this:

  • 60% to survive or that you have to pay yes or yes: Rent, water, electricity, gas, food, gym, cell phone, clothes, pet, etc. Here are also included the debts that you pay monthly, like a credit.
  • 10% to Save: This is the first thing you must set aside at the beginning of the month and it is not touched. It can be for a vacation, or for objects that I want and are not indispensable but I cannot pay in a single blow, such as a TV, a computer, or the down payment for a house, etc. Here I also include an emergency fund which is very IMPORTANT (I will talk about this in another post).
  • 10% to Invest: For a business, in Bonds, in stocks, etc.
  • 20% for entertainment and non-essential things: Restaurants, movies, video games, books, Netflix, etc.

Let’s see an example, suppose you earn $20,000 a month (About $1,000 USD), your division of expenses could start like this.

  • $12,000 to survive.
  • $2,000 to save.
  • $2,000 to invest: If you don’t know how to invest I recommend that you learn, meanwhile that part you can also send to your savings.
  • $4,000 to have fun.

As I said above, it may be that for you the percentages are different and you want to allocate more to saving because you want to go on vacation, or you need less to survive and now you can allocate more to investments. The point is to start with an initial budget and adapt it to your needs, but the key is RESPECT THE BUDGET. If you see that you have already spent $3,800 on fun, there are a few days left until the end of the month and you are invited to a restaurant, say no, better have dinner at home watching Netflix 😏.