We all know that a budget is very important, especially if you are trying to save money for a specific goal. However, starting a budget can be challenging, especially if you’ve never had a budget before.
The best way to start a budget is to track all of your spending for at least one month. Tracking your spending for one month should give you a snapshot of how you generally spend money. Tracking your spending for more than one month will show you your full financial habits. Use an app, your phone, or a piece of paper to write down every dollar you have spent, even the small purchases because they all add up.
Once you’ve tracked your spending you can now successfully create a budget. You should look at your spending for the month and categorize it. Some categories you may have are housing, phone bill, car bill, groceries, dining out, clothes, and so on. If you properly tracked your spending you should see an average of how much you spend in each category. You can now see if you are spending more than your income or if you are living below your means. If you’re spending more than your income then you can start to adjust certain spending categories.