A budget is a plan that you create so that you can manage your finances and keep track of all your income and expenses.
Normally a person would make a budget at the beginning of a month or even when you get paid.
A budget consists of your income and your expenses.
If you take into account all your monthly expenses and you subtract them from the total income, you will have a very good idea of whether you will have enough money or if you should start cutting back on a few things.
How to start creating a budget for myself?
Creating a budget is easy, all you need to get started is a pen and paper, a computer that has spreadsheet available or even in today’s modern times you can easily and fast make use of an app on your smartphone. But if you want to manage your money smartly, you will have to create a great and sensible budget that works for you.
Following is a few tips on how you can create a great budget.
1. Record you spendings
This is a very important step if you want to start a budget.
Many of us spend money daily without really noticing exactly how much we are giving out. It will be a good start if you begin to record every purchase, whether it is big or small, daily purchases, ATM fees etc…
2. Know your expenses (priorities vs spending)
The things we want are not always what we need.
Paying bills, buying groceries, servicing your only vehicle – these can be described as priorities. But on the other side going to the movies, eating out at fancy restaurants or buying designer clothes - that is pure spending.
By creating a budget, you will know if you have enough money for both or if you need to cut back on some new clothes that you don’t really need.
3. Pay with cash
This is something we all know we should do, but it can be difficult especially if it is so much faster and easier to just swipe your credit card when making a purchase. But the truth is this is something you should do if you are serious about creating a budget and managing your money effectively.
By following these tips, you will be able to start a budget but more important is that you should stick to it.