6 Parts Every Successful Budget Needs

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Budgets aren't perfect. No matter how much you plan, it's impossible to predict every single expense, which can make it challenging to stick to your plan. Fortunately, you can weather any financial storm by making sure your budget has these at least these components.

1. Emergency fund

A car repair, medical expense, or sudden job loss can all wreak havoc on your normal monthly budget. Instead of panicking and going into debt after an emergency, you can give yourself peace of mind by starting an emergency fund.

How much money should you keep in an emergency fund? Well, the answer depends on many things, including the cost of your daily expenses, how hard your job would be to replace, and any other unique circumstances. One savings guideline is to save at least three to six months' worth of daily living expenses, though some people may need more. That way, if you ever suffer a job loss, you would be covered for a few months until you found another job.

To prevent yourself from using the money you are saving for a rainy day, it's a good idea to stash your cash in a separate savings account. You can start building your emergency fund by having money automatically deposited from every paycheck. (See also: 5-Minute Finance: Start an Emergency Fund)

2. Debt repayment

Debt can add up quickly and become overwhelming if you do not have a repayment plan in place. Whether you have a mortgage, car loan, student debt, or a credit card balance, it's your responsibility to manage your debt.

You can take away the burden of debt repayment by tallying up the payments you owe and putting them into your monthly budget. This will keep you on track, accountable, and working to hit your repayment goals. To make more progress, aim to free up extra dollars every month and put that toward your debt. (See also: 7 Easy First Steps to Paying Off Debt)

3. Retirement fund

Do you have a plan to take care of your future? If not, it's time to start a retirement savings plan.

Retirement might seem like a long ways away, but failing to save now can have dire consequences later. The more you save while you're still young, the longer you'll have to earn compound interest on your investments. The longer you wait to save, the harder it will be to catch up. Retirement savings needs to be a line item in your budget every single month.

If you work for a traditional employer, you likely have a company 401(k) or IRA plan you are eligible to participate in. Most employers can set up paycheck deductions, making it incredibly easy to start contributing to the account ASAP. In addition, check with your employer to see if they offer any company match. As part of your benefits package, many employers will match a percentage of what you contribute to your retirement account. Failing to at least meet the requirements for a match is leaving free money on the table, so make sure you take advantage of it. (See also: 7 Retirement Planning Steps Late Starters Must Make)

4. Fun money

You can't have all work and no play. Allow yourself a break and start putting money into a vacation or fun fund. Whether you prefer to take a trip, play a round of golf, or spend the day at the spa, you can treat yourself guilt-free by budgeting for it in advance. (See also: Yes, You Need "Fun Money" in Your Budget)

5. Funds for irregular expenses

Not every expense is billed monthly. Most people find they have at least a few quarterly or even annual expenses, such as HOA fees, insurance premiums, club membership dues, and more.

Since they aren't regular bills, it can be easy to forget that they are coming due. Don't panic — you can still budget for them and ensure you always have the cash for odd expenses.

An easy way to handle these types of bills is to create an irregular expense savings account. Calculate what you owe in total irregular expenses for the year and divide it by 12. That's how much you should save every month to cover irregular expenses. Just remember to start saving before your first bill is due so you can ensure you have enough to cover what you owe.

It may also be helpful to keep a financial calendar. You can mark when each bill is due throughout the year, so no quarterly or annual bill will come as a surprise.

6. Regular review

Circumstances change, and your budget should change accordingly. By regularly reviewing your budget, you can see what's working and what isn't. Are there areas where you are constantly going over the amount you budgeted for? Areas where you are spending less? Has your income changed? Do you need to set aside more for savings?

Review your budget at least once a month. If you have a significant other, sit down together and discuss your financial goals. By making small tweaks as you go, you will discover how to use your money most effectively.

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