Budget is an important plan each person needs to have to take care of their current lives as well as other further long-term goals. With which, you can make sure you don’t run out of money and can manage in several circumstance when you need money. If you are new to budgeting, you would have some questions to ask about this term. Now leave the job of answering your questions for me, I have prepared the most suitable response to a handful of common questions below. I also carefully give you the best guide to make a budget with the amazing 6 Jars Rule. Let’s discover!
Frequently Asked Questions (FAQs)
1. Why is a Budget so Important?
A budget is a plan for every dollar you will spend each day or month, which helps you keep your money flow on track and make sure you spend enough and have enough to save.
By planning ahead for large and even unexpected expenses, you’ll have the money you need no matter what comes up in life, without resorting to expensive credit cards and personal loans. And just by this way, you will be guaranteed not to meet money stress in your day-to-day life and soon reach your financial goals.
Specifically, a budget reveals: How much money you make, How you spend your money, and How much you will save.
It’s really necessary to make as it can be a helper in some of the big cases:
Emergencies – Saving small amounts of money now might help you later. Everyone has expenses they do not expect.
Expensive things – Sometimes, we have to pay for expensive things – like a car, a trip, or a security deposit on an apartment. You will have more choices if you have money to pay for those expensive things.
Your goals – You might want to pay for college classes. Maybe you need to visit family in another country. You can plan for these goals and save money. Then you might not have to use a credit card or borrow money to pay.
2. Is it more important to pay off debt or build my savings?
The answer to this question is specific to you, but there are a few guidelines that can help in making this choice.
- As a general rule, pay off expensive debt as quickly as you can — debt with a high interest rate. Credit card debt often falls into this category.
- If you’re saving for bills you know are coming, such as property taxes or college tuition, those are clearly important and need to be prioritized.
- If your employer has a retirement matching plan, try to contribute enough to your retirement each month to claim the full amount they’re offering.
- Once those things are included in your budget, it’s a good idea to start building some short-term savings in an emergency fund.
3. What is an emergency fund?
Your emergency fund is the money you’ve saved up to handle life’s unexpected challenges.
Although you can use it for anything you need, it’s called an emergency fund because it can cover your monthly expenses if you end up between jobs for a time or if you need to take a medical leave that goes beyond your job’s allowance.
Your emergency fund is separate from your retirement fund, which usually comes with penalties if you need to withdraw funds from it early. You should be able to access the money in your emergency fund quickly and easily.
4. What’s a good target for my savings?
A good rule of thumb for your emergency fund is to save up enough to cover your expenses for 3–6 months. This might sound ambitious, but it’s a good goal to build into your plan.
5. How do I make a budget?
Here comes the fun part! The best answer can be briefly summerized into 3 words: “6 Jars Rule”, as well, the best tool coming with is the 6JMM App (6 Jars Money Management App).
The 6 Jars Rules
The concept was detail revealed in the famous “Secrets of a Millionaire Mind”, which is applied by many successful money managers.
The idea of this 6 Jars Rule is to separate your income into 6 different accounts for specific purposes. Specifically:
Necessities Jars (NEC – 55%)
Financial Freedom Jar (FFA – 10%)
Long-term Savings Jar (LTS – 10%)
Education Jar (EDU – 10%)
Play Jar (PLY – 10%)
Give Jar (GIV -10%)
You may think earning a lot means being wealthy, but no. If your monthly income is high but you don’t know how to spend them wisely, your money left at the end of each month is still 0. To make it happen, you have to follow the 6 Jar Rule strictly until you create yourself a good budgeting habit. It’s also a hard task, however, now the method is in your hand, you just got to apply it to reality.
Thanks to the 6JMM App, it’s way easier for you to make your financial dream possible
6JMM App: The Best Tool of the Year
The 6JMM App is the latest money management app developed by Alan AI Voice Lab, which is extremely friendly and appropriate for every generation.
Maybe you as the parents still struggling with money management, then you definitely take a look at the 6 Jars Money Management App, which has been witnessed to be helpful and effective to millions of users. With friendly design and some other unique features, the app brings back advantageous benefits in reaching financial freedom and having a stable wealth in the long term.
This amazing app also works well with teenagers who are growing up with such a variety of expenses to make. Gen Z would appreciate it much due to its efficiency as well as its easy-to-understand organization.
It even works well with kids. If you let your children access digital devices soon, you should advise them to try this 6 Jars Money Management too!
Have a nice experience and thank me later!