How To Budget And Why You Should
No one comes into this world with perfect knowledge on how to budget. But if you’re having financial troubles and not sure how to fix it, budgeting can save you from a lot of that stress.
So what exactly is a budget? It’s foreseeing your future income and expenses, then planning accordingly.
To me it’s setting up a set amount I plan to spend, so that my income can exceed how much I spend. No one wants a deficit at the end of the month.
What Are The Steps To Budgeting?
There are easy steps to budgeting, it just takes diligence.
- Start a cash flow statement to begin tracking what your income is and your expenses in every category. This is a day to day task that can either be tracked on a simple excel spreadsheet or an application. Even a pen and paper if that’s more comfortable. But I personally recommend Mint. It keeps track of all your money coming in and out.
- Now you know your monthly expenses. They may change but the last month you tracked is the best estimate to come. Take that and attempt to reduce spending where you can to “budget” yourself. Then see if it’s feasible in practice. Some examples might be, food expenses are too high from dining out often, or paying for services you don’t take advantage of.
- The previous two steps are generally all you need to consider it a budget. But for those of us looking for financial freedom, try to find ways to increase your income as well. While continuously finding more things to cut and trim your budget even more.
Cutting It Short..
This is one of the articles I want to keep short. Mainly because a lot of these “how to” articles for finance can be long and have too much information. But when it comes to budgeting, it’s best to start simple and focus on the basics! Something like budgeting is a simple process but needs dedication to complete.
Honestly, the hardest part of it, is in the execution. Carrying on with a bunch of examples will take away from your time of accomplishing this. So get out there and budget for you financial freedom!
Drive Thru Summary:
Track expenses, cut what you can, aim to spend less than you make every month. Read here for more information on improving your financial fitness!