- Know Your Net Income: To start a budget, you need to take account of all income you receive. Combine what you make at work, the monthly structured settlement payments you receive, and earnings from any other source. If your income varies each month, use a conservative estimate.
- Track Your Spending: How much money do you spend on groceries each week?How much do you spend on groceries each month? How much are you spending on social events and activities? What are your recurring bills each month? Understanding where your money is going and how much you need to have each month us extremely important to maintain a successful budget. Many people are surprised when they begin tracking their spending. Even small charges should be tracked. Without an honest and realistic view of what you’re spending, it will be more difficult to set realistic and attainable financial goals.
- Set a Goal: Your goal this month might be to finally pay off that credit card balance you’ve been avoiding. Next month, your goal may be to finally purchase that laptop you’ve been eyeing. With proper budgeting, and methodical saving, even large and lofty goals become possible.
- Create a Budget: Once you know what you earn, what you spend and the goal you’d like to achieve, figure out how much you need to save to reach your first goal. Keep track of your spending and make sure you don’t spend more than you’ve allotted each month.
- Monthly Check-In: Stay on track with your budget by cross checking all aforementioned steps monthly. A successful budget plan is achievable with consistency and proper planning.
*Good Rule of Thumb: Allocate 10% of earnings towards savings. A strong savings will give you a cushion when unexpected expenses pop up throughout the year.
Bonus Tip: Cash is king. Paying with cash versus a credit or debit card allows you to physically see how much you are actually spending.. It is easy to overspend swiping your card all the time.
5 Simple Steps to Creating a Budget