Your budget is the amount of money that you will make and spend within a set period of time. Some people have a weekly budget, while other people focus on a monthly one. You may wonder what elements go into a budget when you start a budget. Take a look at the following list for guidance.
How To Create a Budget
Check Your Finances
Review your weekly or monthly income, bank statements, credit card statements, investments, and all loan obligations.
Also Check: How To Regain Control Of Your Finances In 2021
Figure Out Your Income
If you make money from various sources, calculate the sum of what you bring in monthly or yearly. Your income may be your full-time job, part-time job, freelance work, side hustle, social security, lottery payouts, disability income, scholarships, tip money, commissions, stipends, etc. If you do seasonal work that fluctuates, try to figure out your average income in that set period.
List Your Expenses
Your expenses include anything you spend money on regularly. Such expenses can consist of required things like rent/mortgage payments, essential grocery shopping, educational tuition, health insurance deductibles, pet care costs, and utilities.
You should also consider optional expenses like entertainment, eating out, personal grooming, and travel.
If you have a certain amount of money that you want to save, you will have to make some comparisons. Take a look at your income and required expenses. When you subtract your expenses from your net income, the amount is the money you have leftover. Ask yourself how much money you can save from the money left after expenses.
You can always set up a savings account separate from your checking account. You can also set up different types of savings accounts. Some people have a savings account just for education, travel, future home purchases, and more.
If you have credit cards, don’t max out your balance. Try to keep credit cards for emergencies or only spend what you can immediately pay back. When you have the extra savings, don’t just put your surplus funds into a bank. Try to find CDs or other money market accounts that allow you to collect interest on your savings.
To avoid temptation, you may want to leave your credit cards at home and put them away unless you have an emergency.
Keep Track of Your Budget
Having a budget does not have to be overwhelming. Keeping track of expenses and various streams of income does not have to be overly time-consuming. There are many tools you can use to help maintain and adjust your budget.
Simply download and open an Excel spreadsheet on your computer and create cells for expenses, income, savings, etc. Excel spreadsheets can be set up for a week, month or year. You may want to look at a tutorial on how to use the different functions that will do automatic calculations.
Smartphones are a regular part of society. There is an app for everything possible – including budgeting. Use a budget app to update and track your money goals frequently.