Are you struggling to make sense out of your finances? Congratulations then. That’s the first step that you can take towards attaining financial stability. If you are tired of living from pay check to pay check and not having enough cash to pay for the most basic necessities, then it really is about time that you started using a budget.
Coming with a budget might not be an exciting prospect but you can really get benefits out of having one. The important thing for you to remember is that you need to have as much accurate information about your finances as you can. It does not take long for you to create a budget. At the most it would take an hour or so. Here are the steps that you can follow.
We have mentioned the importance of having accurate financial information that you can use. The best way that you can get that is by getting as many financial statements as you can. These would include bank statements, investment documents, utility bills or basically any document that can provide information about your income or your expenses. There are many such documents.
You can now start by writing down all of you sources of income. Basically anything that brings in money can be considered as a source of income. If you are receiving some money from your parents on a regular basis then you can consider that as a source of income.
After you are done with your income, your next stop would be to list down all of your expenses. This might take a bit longer than writing down your sources of income. You should take your time and consider this carefully. Obviously you cannot list down all the things that you buy within a month. The way to do it is come up with an approximate amount. For your food you could be spending $1,500 monthly for example.
Once you have listed down your expenses, you need to break them down into two categories; fixed and variable. This is important because you should know which expenses you can adjust and change. Obviously, you cannot do anything about the fixed expenses. When you need to make adjustments on your budget, you turn to your variable expenses for that.
Total Income and Expenses
You can then go ahead and total your monthly expenses and income. Your income should be larger than your expenses. If it is smaller then you have to make adjustments. You would have to make some changes on your variable expenses. You have to make sure that the changes would be realistic and possible for you to implement.
Stick to the Budget
Perhaps the most important part of creating a budget is making sure that you stick to it. You might go through all the trouble of coming up with a good personal budget but if you are not going to stick with its use, then what good is it?