Starting a budget can be challenging, especially if you have never made a budget! Here are four steps to help you start your budget this month.
The first step is to track your spending every day. You need to know how much you spend to know if you are sticking with your planned budget. You can do this on your phone or a piece of paper, but this will help you know if you are overspending in certain areas.
The second step is to find like categories in your spending. When you create a budget you want to make sure you are dedicating enough money for the things you spend money on. By creating spend categories you are ensuring you are setting yourself up for success with your budget. Pairing this step with step one will help you to know exactly how much you plan to spend each month.
The third step is to list your income streams. A budget is not just what you spend, but it is also what you make. Each month you should know how much you plan to earn and how much of that earned income you plan to spend to give you some leftover money or a $0 balance. If you go negative, you are overspending and need to cut back or make more income. If you have a variable income, listing what you expect to make that month can help you.
The last step is to make financial goals and have these as part of your budget. It is important to plan for your financial goals to make sure you reach them. Just having a budget with your income and spending will not help you get to these goals. Your goal should be its own budget line.