How to set up a budget, and why do you need to do so?
You need a budget to know how much you are earning and spending and where your money will go.
Setting up a budget helps you make wiser choices, reduce unnecessary expenses, and save money.
- Do you know how much money you earn and how much you spend each month?
- Are you earning more than you are spending?
- Do you know where your money is going?
These are questions you should ask yourself in order to establish a personal or family budget and keep track of your earnings and expenditures.
Establishing a budget can help you keep track of every amount of money that comes in or goes out and enables you to save money and reduce expenditures and debt.
A personal or family budget provides an understanding of your expenses and how you can reduce them. It helps you manage your income so it meets or exceeds expenses.
8 Tips for Establishing a Budget
“Budgeting has only one rule: Do not go over budget.”
– Leslie Tayne
Here are a few simple tips anyone can follow to track the amounts you earn and spend, set a wise budget, and have more control over your money.
1) Sum up your expenses
Start by summing up all last month’s expenses and compare the amount to the amount you earned.
If you earned more than you spent, that’s great, but if your expenses were higher than your earnings, consider this a red flag, warning you to rectify the situation.
2) Make expense lists
Divide your list of expenses into two lists, one covering fixed bills and expenses on clothing, transportation, services, and food, and another for other expenses, such as entertainment, restaurants, or vacations.
Find out where you can cut off, where you can postpone the purchase, and which of these expenses are not really necessary.
3) List of intended purchases
Make a list of what you intend to purchase in the next six months.
Can you take out of the list anything? Are all items essential?
Take what is not so important from your list, or find ways to earn more money.
4) Track the amounts you spend
Keep track of every amount of money that goes out of your account.
Are all expenditures necessary?
Can you cut out some of them? Are you spending more than is necessary on your insurance, food, clothing, gas, electricity, telephone, or other services?
You can always make a survey and shop where it is cheaper.
Additional Tips for Establishing a Budget
5)Find out where you can save money
You can invest your money in a savings account or a retirement program.
No matter how much money you earn, it is important to put some money aside that you could use on a rainy day.
6) Monitor your expenses
Always remember to control and monitor your income and expenses.
Be alert and know that your budget will change from month to month, so you must review it and make adjustments.
7) Be honest with yourself
Be as accurate as possible when estimating your expenses. Don’t say it doesn’t matter, it’s a small amount, or I can’t live with this or that.
8) Sticking to the budget
Remember, establishing and sticking to a budget requires common sense and discipline.
Sticking to a budget does not mean that you live a disciplined life that is too disciplined, with no pleasure and fun. It means balancing your expenditures and earnings and striving to earn more than you spend.
You want to have a bigger budget for spending money, buying things, and having fun. That’s fine, then make the effort to earn more.
You can always look for a more profitable job, work more, strive to get a promotion, and learn how to manifest money and the things you want.