5 Guiding Steps to Writing A Good Budget

August 17, 2018 0

Looking for the best way to keep your financial obligations in check? Then a good budget is the best way to go about it. Think of a budget like a roadmap. If you do your math right and write a great budget, then chances are that your money problems will be a thing of the past. And this fact has borne fruit in almost all instances where a good budget has been in play.

It wouldn’t hurt you to spare some time to create a budget which will, in turn, save you a lot more money at the end of the day. A budget basically works to tell you where your money is coming from and where it goes later on. So, to write a great budget, here are some quick guidelines that you should apply.

1. Track your spending

This is essentially the main reason why you are writing the budget in the first place. And most of the time, it feels like pain. But you can use a notebook to help you create the number of categories that you need. A budget is meant to contain all the different expenses that you may subject your finances to within the period of the budget.

2. Add it up

After you have included all the income and expenses categories in your budget, the next step is to tally the results. This should give you a clearer understanding of what you are using your money on throughout the budget period. So that you can adjust where necessary like doing away with any expenses that you feel you can do without. This will, in turn, help you to save more money and even invest more.

3. Sort it out

At this stage, you will need to separate every category of your expenses into variable and fixed expenses. The variable expenses may include clothing, entertainment, groceries, etc. While the fixed expenses may be loan payments, insurance payments, utilities, mortgage or rent, etc. After you have separated the expenses into two groups, the next step is to multiply each category separately by 12. This will give you a close estimate of what your annual spending figures look like. You also need to include the expenses that may come just once or twice each year. These expenses may include school fees or vehicle registration.

4. Find your balance

So, now that you have successfully managed to create an excellent budget and know the record of your spending, it’s finally time you compare it to your income. Your total income should include your investment earnings, paychecks, child support, etc. It should contain all the money that comes in each month. You then multiply this amount by 12 as well to obtain your total annual income. After doing this, you can then compare your total annual spending to your total annual income and see where you stand. While doing the balance it’s also important to look at all the debts and credits that you have. Come up with a monthly and weekly plan or schedule that will help you in keeping track of your debt payment and also clearing your Lendgreen loans.

5. Plan

If you are happy with what you see, then here is where you now put everything together. You complete creating your budget here and start working towards achieving your budgetary goals. Stick to your budget and see it help you achieve your financial objectives.