Being in control of your finances is such a wonderful feeling. But getting your finances in order doesn’t have to be difficult. Creating a budget is the simplest way to achieve your financial goals to ensure you know where your money is going and you don’t overspend. So if you want to save money you have to first figure out a budget. With the right budget, you can calculate how much you can spend, while still putting aside enough money to pay the bills and grow your savings.
So let’s begin…
How to Create a Budget in 3 steps
1 Start with your income
Identify how much money you earn in each month after taxes. Don’t forget to add any additional income you may receive in addition to your job. (stuff like tips or bonuses)
2 Now figure out your expenses
Write down each expense amount that goes out each month. Some you’ll know Immediately and others you may need to calculate overtime.
Categorize Your Expenses into
Fixed & Variable
Fixed Expenses | Variable Expenses
Utilities Other expenses that can fluctuate
Other Scheduled Payments
3 Compare Expenses vs. Income
Subtract your total expenses from your total income. Are you living within your means? Or are you going over budget? Take a serious look at your expenses. Could you cut back?
You can rework your spending habits by setting monthly goals for both savings and each expense category.
Keeping To Your Budget
Now that you have a budget, continue to track your income and output for a few months. Is your budget realistic or do you need to change things up?
This is your budget, so spend a few minutes thinking about what you want.
When you compare how much money you have available to those things you want or need, you’ll be able to set priorities and develop a spending plan. So ask yourself questions like:
~Which savings goal should you put money towards?
~Which debt should you tackle first?
~What are your short-term and long-term financial goals?
Looking at income and expenses, decide what you should save for and how much you can afford.
You can get into trouble with spending too much on things you don’t need. Limit spending based on your needs and your wants. The understanding between real needs and wants will help tremendously.
As times change you might need to update and adjust your budget so it still works for you! What works today might not work in five years from now. So don’t hesitate to modify as needed.
Sticking to a budget saves money and headaches. It’s the first step towards a healthy financial future!
Comment below and let me know if your new to budgeting or not. And what are some of your most important money goals?