If you’re thinking of creating a budget for yourself, you’re making a wise decision. Budgeting smart and keeping track of your cash flow is a great way to keep yourself in good financial standing, and to save up for bigger purchases you may not otherwise be able to afford. While budgeting doesn’t sound like fun, you will gain peace of mind by having a better understanding of your finances and can avoid credit card debt when you do choose to indulge.
The first step to creating a budget is determining your income. This can be as simple as taking a look at your monthly pay stub. Alternatively, it may be somewhat more complicated if you’re a contract worker or have an unpredictable work schedule. Try to come up with your average weekly, monthly, or yearly income – whatever is most feasible for your current employment and life situation.
The next step is to understand your expenditures. You should begin with the regular payments you make weekly, monthly, or yearly. These include rent, debt, taxes, car payments, and so on. These amounts are typically not going to vary much. They’re also the most important things to pay for with your income.
Then it’s time to figure out your more varying payments. These might include groceries, entertainment, pet care, and other shifting expenses. This helps you figure out where the rest of your money is going.
With your new budget, you can address your spending realistically and figure out if any cuts need to be made. With luck, you’ll be able to put more away into your savings as a result of your smart budgeting.