A lot of people tend to think that budgeting has to be painful. However, let’s dispel this myth together! Just know that you can work your way from knowing nothing about budgeting to making your monthly budget that you update regularly.
In this article, you will find useful steps how to create your own budget. In case you want to see all the information electronically, you can also use a digital service (Personal Capital, for instance). This is especially helpful for people who are visuals, as you will be able to see all the graphs and charts.
In case you find yourself in a challenging financial situation and need an instant way out, you can always use 24/7 payday loans. But the main thing you need to understand is what budgeting means, no matter which way – handwritten or digital – you will choose. Here are a few budgeting tips for beginners to help you get started.
Calculate Your Monthly Income
The best way to start budgeting is to calculate your income. You can write down a list of all your incomes at the top of the page or in your budgeting excel page. Your income is what you will take your expenses from.
For a lot of people, the only source of income is their salary. However, if you are a business owner or an entrepreneur who has additional income from a side hustle, you still need to include all of your income on your budget list. Try to evaluate what monthly income you will have. If you tend to have inconsistent income, you can take the average of the past three months income and use that number.
As an additional data, you may also include your tax information if you like to know what you are paying, but this is optional. You can just fill in your regular salary if you prefer. In order to use as accurate information as possible use a paystub.
And remember to write any additional income aside in your budget worksheet. It may seem tedious and boring, but it’s worth it! Later you will be thankful that you’ve planned your budget ahead of the month.
Include Your Fixed Monthly Expenses
Next step is to add up your monthly expenses to your budget list. You may want to include your fixed expenses. These expenses are called fix because you have to pay them every month (such as your rent/mortgage, water, gas bill, car payment, groceries, and student loans). Also, include any possible debts to the same list.
In case you are not sure about your expenses since you have never budgeted before, just check your accounts online for the last few months and use the average number. This task may seem intimidating. However, you need to make your budget numbers as accurate as possible, that’s why it’s crucial to use as exact numbers as you can.
Set Financial Goals
Write down your financial goals. If you have no idea how to do it, just think of the vision you have for your financial life. Would you like to be financially successful and independent? Would you like to be debt free? Would you like to have wealth?
Take some time to think about your ideal goals and think about where you are at the moment. Then, set your personal short-term financial goals (i.e. under a year) that you will write down in your monthly budget. For instance, you may want to get out of debt, save for a down payment, or fund a retirement account on your future house. Your options are limitless!