A 6-Step Guide To Creating A Budget

A 6-Step Guide To Creating A Budget

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If you want to achieve financial success, you should have a budget that will keep you from being broke. Below are the steps that will get to create your own budget:

1st step: LIST DOWN YOUR MONTHLY INCOME

To get started, you should know how much you are getting in a month so you can create your own budget. If it is not fixed, estimate how much you’ll be getting for this month or get your last three months’ income and use it a guide.

2nd step: LIST DOWN YOUR MONTHLY EXPENSES

List down your expenses that are required to pay, these are your rent, loan, water, and electricity bill. Include the amount you need to pay for the following so you’ll know how much your total bill is for the month.

3rd step: SET YOUR FINANCIAL GOAL

What’s the vision you want for your financial life? Whatever that is, write that out. Think about where you are right now and think about how can you get that. Your goal will determine the financial goals that you want to set for – whether you want to be debt free or just be wealthy.

4th step: DETERMINE YOUR NON-ESSENTIAL EXPENSES

Non-essential expenses are your discretionary expenses – these are things you are paying for but not truly needed. Examples include dining out, personal care, clothes, and entertainment. You can adjust the budget for these things so you can save money for other things you really need.

5th step: SUBTRACT YOUR INCOME FROM EXPENSES

By subtracting your expenses from your income, you’ll see how much money you have for the month. If the remaining budget is higher, this is good news and means that you earn more money than you spend. But if you break even, it means you have enough money but no margin. You can adjust your budget for non-essential expenses to give yourself some margin.

6th step: MAINTAIN YOUR BUDGET

Once everything is listed, you’ll need to monitor, implement and adjust your budget accordingly. Make it also a habit to look at your list and check the things you made. By doing this, it could help you stay on track and see if you can follow on your plan.  As you do this, reflect on the process and if needed, make some changes. Just keep doing this and let this be your guide to help you achieve financial success.

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