Have you ever thought to yourself “I don’t know where my money goes?” Well creating a budget is a good way to see where your money goes and what needless spending you can cut down on. Majority of individuals/households don’t have a budget in place and if they do, it’s often not tracked. Everyone wants to see more of their income stay in their savings account rather than their spending account and without a budget, it will make it hard to save. Creating a budget can be an overwhelming task, especially if you are creating one for the first time. So where do you start? Follow some of these simple tips to get your budget underway.
- How will you record and track your budget?
A spreadsheet is a great way to track your budget. There are a lot of free templates online you can use, or you can just create your own. One thing to remember when creating your budget is to have separate expense sections ie. loans, car expenses, house expenses, food expenses etc. This will help you to keep track of where most of your money is going. You will also need to determine how often you want to track your budget. Do you want to do a weekly, monthly or a yearly budget? You may want to create more than one budget. You might want to track your spending monthly but have a yearly budget for the more long term saving goals or expenses that occur once a year like a car registration.
Related Article: 6 Tips to Save Money
- Determine your Income
Once you have worked out your template, a good starting point with your budget is to work out how much you earn. Add up all avenues that you receive income from. Don’t forget to add in the extra income you receive like gifts, government payments, rental income etc. As well as any money you have in savings.
Next, find out where your money is going. As mentioned before, separate your expenses into sections so you can see where you can cut down on spending. To add up your expenses, check your transactions in your bank account as well as receipts. Work out what your ongoing payments are as well as one-off transactions.
- Set Goals
Once you have worked out where you are financially, you can start setting goals. Set yourself projected spend for each section and your actual spend. You will need to work out if you are spending more than you are earning. If you are, then you will have to cut down on spending in certain areas. Also, work out how much money you want to put away into savings for a big purchase later on or a holiday etc.
If you don’t have a budget in place then there’s no time like the present to make one. Always try and stick to your budget and you will be able to reach your financial goals for the future.
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