Getting to Know the Personal Budget
A personal budget is a tool that helps you have greater control over your finances. Have you ever felt financially lost, as if you couldn’t make your finances improve? Is it taking too long to achieve the financial stability you dream of?
Perhaps your problem is simply a lack of organization. Without this necessary organization, simple tasks like daily shopping, traveling, going out, and buying items you want can become a challenge.
So, take a look at this brief explanation on how you can create a financial budget quickly and easily. With a budget, you can control your finances clearly and effectively.
Step-by-Step Guide to Creating a Budget in 30 Minutes
Quick Preparation (5 Minutes)
Starting from the beginning, to create a budget, you need to gather all your financial information. Whether using more traditional methods like pen and paper or more modern tools like Mint, an online tool that helps you organize your finances, you need to have everything visible to start an analysis.
Through your preferred method, gather everything you earn and spend. Don’t let anything slip by.
With this data, it will be easier to analyze whether you have money left over or not at the end of the month.
Setting Financial Goals (5 Minutes)
Goals, whether big or small, are what move us. For your finances, it’s also necessary to create goals. Doing so will give you focus and a target to reach, and you’ll feel more motivated to stay on track with your money.
To establish your goals, you need to be realistic and set short- and long-term goals. For example, in the short term, you might want to save 10% of your salary per month, save for emergencies, eliminate debts, among others.
For the long term, your goals may be larger, such as getting a new car, a new house, or living off your income. These goals can help you limit your spending.
Goals help you better visualize where you need to cut expenses and where you should invest.
Listing Income and Expenses (10 Minutes)
After gathering your information and setting your goals, it’s time to list your income. This means, in the most organized way possible, you should list all your sources of income (whether fixed salary, freelance work, or any other money you usually receive).
You also need to list your fixed and variable expenses. Quickly organize these into categories, prioritizing essentials and leaving variables for later review. Then, add up all the money that comes into your account each month. After that, sum up everything that goes out.
You’ll end up with a total for expenses and a total for income. Then, subtract your expenses from your income and see if the result is positive or negative.
Adjusting and Reviewing the Budget (5 Minutes)
If you’re in the negative, it means your budget needs adjustments. Carefully analyze where you can improve and cut expenses. Maybe you’re spending more than necessary on clothing, food, outings, among others.
You don’t have to cut all things that bring you pleasure, but you do need to identify which unnecessary expenses are most important to you and cut the dispensable ones.
If, even after making cuts, you’re still in the red, you’ll need to analyze where the problem lies. If you’re earning less than you need to spend, you might consider taking on some extra shifts, accepting some side gigs, and letting go of certain luxuries.
Tips for Saving Time and Keeping the Budget on Track
If you have trouble remembering a bunch of bills, consider setting them to autopay. This tip helps you avoid missed payments, keeping your budget more organized.
To avoid organizing just once and then forgetting, set aside at least one day a month to review your accounts and see if you followed through on your intentions.
Conclusion
A budget is a simple tool that has underestimated value. In today’s world, so many things involve money that we spend without even noticing. Thus, it becomes difficult to organize everything mentally.
Moreover, you should start celebrating your small victories and enjoy not just when a goal is reached. Learn to appreciate the process so that your financial habit changes are lighter.
These small tips can help you achieve the desired financial stability and health!
