If you are saving up for something special or need to see where your money is going and how much you have coming in, you need to learn how to make a budget.
Making a budget will give you a detailed layout of what money you have coming in and what money goes out for bills and other spending habits. It allows you to plan for spending and saving each month.
While it is not the most exciting activity that you can do, it is necessary if you are living on a fixed income or want to start saving. Budgeting and figuring out your expenses will save you in the long run and help you be sure that you are living within your means and not racking up a bunch of unwanted debt.
How to Make a Budget – The Simple Way
Don’t overcomplicate your budget! These easy tips are the simple way to set a budget that you’re going to want to stick to!
Calculate Your Income
When you go to calculate your income, you want to make sure that you are counting all of the sources of income you have coming in each month.
This could be from a job, side gigs, benefits, etc. Anything that comes in steadily every month, would be considered income.
Create a List of Monthly Expenses
Once you have your income amount, the next step is to create a list of your monthly expenses. Your expenses are what will come out of your bank account each month.
A few examples of your monthly expenses could include:
- Monthly car payment(s)
- Mortgage payment or rent
- Childcare costs
- Transportation costs
- Insurance
- Utilities
- Phone/Internet bill
- Groceries
- Household expenses
- Loans
It’s good to set your budget and the best way to monitor it is to have a Budget Planner.
Oh, and if you are just totally confused and need that personal support check out our Big Budgets Course!
To see what your monthly bills are each month, gather your monthly statements or receipts. It is a good idea to use a bank statement from the last few months.
You can also look at previous bills for your utilities so that you can estimate what amount you will need to budget for each month.
Once you have everything together, total up the amounts of your expenses so that we can compare them to your income.
Go Over Your Income and Expenses
After you have collected your monthly expense amounts and know the amount that you are bringing in each month, you can go over the income and expenses to see how much you are spending vs how much is coming in.
If your monthly expenses are more than the income that is coming in, this is a sign that you are overspending and will need to make some changes.
The goal is to have more income than expenses so that you can create a healthy budget that will also allow you some extra wiggle room or money to set back for a rainy day.
Cut Back on Spending (if needed)
One of the most important things you can do when it comes to expenses is to see which ones have a set amount and which ones give a little wiggle room. For instance, your monthly rent payment may never change, but the amount you spend on groceries can change from month to month.
If you are finding yourself in a position where you need to cut back on spending, the expenses that aren’t a “fixed amount”, like groceries, can possibly be adjusted. For example, you can be more frugal with your grocery shopping to cut down on the monthly grocery expense.
Income More Than Expenses?
The whole point of budgeting is to get your income to be more than your monthly expenses. If you have accomplished that goal, congratulations!
Now, just because you have some extra money left over each month, doesn’t mean you should increase your spending or add more expenses to the list. It’s important that you also set some money back for a savings or rainy day fund so that if you need it, you have it.
Budgeting can be tedious work but if you are wanting to become financially stable, it is an important step that should be happening.
More Saving Tips
When it comes to saving money, the options can be endless but you do have to be in the right mind frame to make that move. Here are some other great money saving resources that can help you cut down on the amount of money that you’re spending. Why spend more money when there are ways out there to save?
Use these other tips to save money as a great way to add more to your bank account fast. You’ll be saving money money in no time at all.
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