Have you ever created a budget? I honestly do not know what I would do without it. If you’ve ever wanted to create a budget, but didn’t know where to start, this blog post is for you. I am here to help you get back on track with information and resources on what to include in your budget. Now keep it mind, you might have additional expenses not listed here, so make sure you include those as well.
A budget is not as much about what you make as it is about what you spend. You can’t always control what you make, but you can control what you spend.
Step 1: Income
Calculate your total income on a weekly or bi-weekly basis. This includes any pay cheques, allowance, and birthday money that you receive. You need to know how much money you will have each month to meet your expenses.
Step 2: Expenses
Calculate your total expenses on a weekly or bi-weekly basis. Take a look at your last three months of spending and break your spending down to:
- “Fixed” (necessary) bills such as a phone or car payment, insurance, saving and planning
- “Discretionary” spending such as lunches, coffee, entertainment, gifts
Expenses can include the following:
- Savings Account
- Education (including books and supplies)
- Cell Phone
Step 3: Savings
Make sure you include savings as part of your budget. Pay yourself first!
Here are some additional tips that I always consider when I am developing a budget:
- Be honest with yourself. Don’t cut out all of the fun, just make some adjustments.
- You shouldn’t be paying big bank fees, do some research and look at other options.
- Pay down the debt with the highest interest rate first. If you can’t pay it right away, be sure to make the minimum payment – especially if it’s a credit card. Pay down your “bad” debt first. This is debt with a high rate of interest, when you’ve borrowed for personal consumption, and the interest is not deductible.
- If your debt is really large, you may need to borrow from a line of credit, which usually has a lower interest rate than credit cards.
Let me know in the comments below what is your best tip for budgeting? Don’t forget to follow Money On Tress on Twitter (@Money_On_Trees) and Facebook /MoneyOnTrees.
- Gail’s Guide to Building a Budget
- Money Crashers: 12 Steps for How to Make a Budget – Personal Budgeting Tips for First Timers
- How to create your budget