5 Easy Steps When Creating A Solid Budget


Creating a budget plan may seem like a daunting task but we are her to make it not so challenging. If you’re on a mission to save as much as you can and keep your savings in a nest egg then you have to be patient and strategic and put that money in the right accounts. In 2019, the reality is that times are hard for a lot of us but when we get t see what we are spending there is a visual reality to seeing where all of your money is going. This in turn can put a new perspective on what your actually spending and can make you a more disciplined spender when isolating where you should or should not be buying. Follow these steps for setting up a realistic budget that gets you where you want to go.

Things you will need for this

  • A computer/laptop
  • A spreadsheet program such as Microsoft Excel. If you do not own Excel there is a free downloadable program similar to Excel called Open Office
  • A spreadsheet to work off of. I have a link here for a free one that is self explanatory of where you can lug in your figures.

1. Try Calculating all of your expenses

What you need to do first is to find out exactly how much you’re spending each month. Do this by consulting your bank statements, receipts and financial files. Because some expenses are intermittent, such as insurance payments, you’ll get the most accurate financial picture if you calculate an average for six months to a year. Add up everything you spent for the last six to 12 months and then divide by the amount of months, which will give you your average monthly expenses.

Try to find all of your bills that you pay on. If you do not have paper bills you can go online or sign up for the service so you see a real value. Remember that being thorough when you add up expenses is important in creating a realistic budget. A forgotten bill really throws a wrench into your savings plan. When calculating your expenses, also factor in unexpected bills, such as unplanned car repairs.

2. Try to calculate your monthly income

Once you’ve figured out how much money you need to stay afloat financially each month, it’s time to determine your actual income. Besides your regular salary, get an accurate picture by adding in any extra funds that come your way throughout the year, such as cash gifts, sale of items online or via garage sales, and don’t forget other income sources like alimony, child support, interest, dividends and rental income.

3. Setting goals for saving and what you need to payoff

Do this by subtracting your monthly expenses from your income. If you determine you’re making more money than you’re spending, congratulations. This amount can be earmarked for savings and to pay off debt.

But if you determine you’re spending more than you’re making, it’s time to do some cutting so you have something to save and don’t go further into debt. The best way to figure out where you can cut from your expenses is to track your spending and record every expense for a month. Seemingly insignificant items such as a cup of coffee add up over time. For instance, even if you spend just $5 a week on snacks, that adds up to $260 a year, which is not insignificant.

One you have a clear picture of where all of your money goes, be merciless in cutting expenses until your budget is in the black. Cut enough so that you have 10 percent to 20 percent of your income left over each month to add to your savings account. If you are unable to cut a sufficient amount from your budget, consider ways you can increase your income.

4. Use spreadsheet to track your spending and progress

Use the downloadable free Excel spreadsheet to stay on top of your budget and record all of your expenses and income. Having to input expenses will cause you to think twice before splurging, and it’s especially satisfying and motivating to record when you’ve met a savings goal.

5. Try to be disciplined and real when maintaining your budget

Every month look at your budget sheet to see if anything changed. If a bill was added during one month add it to your sheet and look at what you still have left over. Evaluate that bill a month later to see if you need it not want it. If you need it and you feel that you can find a better saving alternative try to swap it out. By aiming to stick to your budget most of the time, and you’re bound to reach your financial goals.

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