Travel Expenses Plan - Create a Budget and Financial Plan

Travel Expenses Plan - Create a Budget and Financial Plan

Creating and keeping a budget will allow you to balance your spending and saving to help ensure that you have enough money available for the things that are important to you and for reaching your goals. Budgets also help you stay out of debt, or help you get out of debt if you're in debt.

A financial plan tells you how to spend and invest the money you have budgeted to reach business goals. When driving somewhere that you're not familiar with, you use a map, or these days a mapping application, to get to your desired destination. This helps you get there the fastest, safest, and most efficient way possible. Without a financial plan, you're going to waste money, make it more slowly than you probably could, and put your money at unnecessary risk. Create a budget with your current income and liabilities. Then make a written financial plan with short- and long-term financial goals that you can reference regularly. Having a business plan will give you a map to reference and to help you stay on the right path. It's like using a workout routine when you go to the gym; without a plan, you can get hurt from overtraining, or not get the physique you want for the beach.

One strategy to use is the 50-30-20 method. Senator Elizabeth Warren helped develop this plan while at Harvard. The biggest piece, 50% of your take-home income, should go towards essentials and basic living expenses: food, housing, and transportation. The second is 30% for flexible spending on discretionary expenses; clothing, travel, and entertainment. The last 20% goes towards helping you meet your financial goals of paying down debt and saving. 

First, look at all your sources of income and determine how much you have available to spend each month. This will be your total income and this is what you're going to divide up into your 50/30/20 budget plan. If you’re self-employed, you’ll need to track your wages more closely and base your plan on your average monthly income.    

Second, keep track of all of your spending and divide it up into the three categories of essentials, flexible spending, and financial goals. Now, if you’re overspending in one of the categories, adjust it so you’re falling into the 50/30/20 parameters. 

For example, if you’re making $3,000 a month, your budget should be $1,500 for essentials, $900 for flexible spending, and $600 for financial goals. If you're spending $2,000 on essentials, then you have to cut it by at least $500. The easiest way to do this is by cutting the big three: transportation, food, and housing. One suggestion is to add a roommate who pays $750 a month, this way you're covering the extra $500 you went over on your essentials category, and now you have an extra $250 to go into one of your other categories, like financial goals. 

There are several ways to save on transportation, like carpooling, riding a bike, or using public transportation. 

Food is tricky because you want to save on the sources of food but not on the quality. For example, a friend of mine and his wife really wanted to buy a nice house so they started eating top ramen every day for a year. They saved a lot of money and bought a house. But I don’t believe that the collateral damage from the high salt and low nutrition was worth it, because they ended up with high blood pressure. Instead, keep eating high-quality organic fruits and veggies, and cut back on eating out and substitute with economical options.    

Overall the strategy is to cut as much as you can from the essentials and flexible spending categories so you can add more to the financial goals category.

The 50-30-20 Rule works because it’s simple and everything is clearly defined, making it much more likely that you’ll stick to your plan and meet your financial goals. It also allows you to adjust percentages to help you meet your goals faster.

For more strategies on building wealth to increase your travel budget check out: How to Become Rich and Successful. The Secret of Success and the Habits of Successful People. Entrepreneurship and Developing Entrepreneur Characteristics or How to Become Rich and Successful: Creative Ways to Make Money with a Side Hustle. How to Become a Millionaire - Learn the Best Passive Income Ideas.