When it comes to forex trading, most people think that they are ready to get started just because they have the tools and software. What they forget is that it's a business. And like any other business, you need a budget and plan for it. Don't treat forex as one of your extras. It deserves as much attention as every other expenditure you make. We've broken down the whole process into four simple steps to help you budget for your forex goal.
Steps to Budget for Your Forex Trading Goal
Step 1: Work out how much you need to save
First, you need to determine how much money you are currently spending. That is your subscription fee as well as your trading capital.
Second, determine how much money you need to save. This could be because you're saving for three months' worth of trading capital or a set amount to deposit into a trading account.
Third, make a plan for how frequently and for how long you'll have your money available. Will you be trading every day? Is it only on weekends? A couple of hours here and there? All of these factors will have an impact on your trading strategy and account balance.
Make your budget work for you by getting a clear picture of where the money is going and then making adjustments as your financial needs change. It's important to factor in all costs, including interest, fees, taxes, and an amount for unexpected opportunities that present themselves. Begin by listing all current and future anticipated expenses. Determine how much money is genuinely available for saving each month.
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Step 2: Write down your priorities
Pick three or four of your biggest priorities, and rank them in order of importance. Now prioritize the ranking, choosing the one thing you'll do first.
The key to making any budget work is knowing what you need to spend money on and when. Think of your ideal budget like a map: you're charting your course in real-time by making tradeoffs among different priorities.
Each decision moves you further down the road toward your financial destination. So, which tradeoff is right for you: Spend more now on a big-ticket item or save more for later? Think about this for a minute.
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Step 3: Set realistic milestones
To budget effectively, it's essential to set realistic goals and milestones. Begin by determining how much money you need to save per month to have the funds ready in, say, six months. Keep in mind that you will need money for living expenses during this time. If possible, try to build some cushion into your savings not to need every last penny right away.
Vague goals may not see the light of day. Instead, state how much money you need to save each month, what steps you'll take to get there, and when you expect to achieve your goal. A realistic plan with a timeline is essential to managing your budget. Split up goals into short and long term, divide them into spending categories, and track them throughout the week.
Make sure it's something you can do, not just something you wish you could do. Then make plans for action and stick to them! Another idea is to have some form of automatic savings set up, so you won’t be tempted to dip into your savings in your current account.
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Step 4: Cut down costs
Finding ways to save money on your budget can be a challenging task. There are many cases in which we pay for certain subscriptions that we have not used for some time. In this situation, you should check if the service you have been paying for is still necessary. This can help you discover a way to save up quite a lot of money for your forex goal.
For example, could you cancel your Netflix subscription for a few months to put this money towards your forex trading goal?
Sometimes you need to take some time out to consider what you value. Use this time to reflect on what is essential and how this fits in with your overall goals. Do you need your monthly magazine subscriptions, or are they a waste of money? How much do you spend on takeaway food? Can you cut back? Cancel services you don't use. By identifying what you really need, you'll have more money to save for your forex goal.
Once you've broken down your expenses, you can then begin to cut costs to save some money. For many of us, the most significant expense is usually rent or housing. While you might not be able to move for less rent (though you could!), take a look at ways in which you can reduce your costs. Going down your list of more minor expenses, consider whether or not that item is essential.