How to budget your moneyCredit: InvestopediaCredit: Investopedia
Do you budget your money? If yes, then you are very smart person who knows how to effectively manage your earning and spending. But if not, then you can be in big trouble, since you are inviting more expenses and debts in your life and not focused on savings. There its very important you learn how to budget your money and use your income in efficient way.
Steps on how to budget your money
So to control expenses and encourage savings, making a budget is very important and to do this following are the simple steps which will help you to identify the way of budgeting.
- Identify your spending trends
Firstly take record of your monthly spending’s and identify how much money have been used on different expenses. This means, that whenever you purchase or buy anything note down the amount spent. It is better to prepare a spreadsheet or register which contains the list of all the expenses made in a day. If everything is recorded it will help in budgeting the money efficiently.
- Make a budget
Now, secondly, create a budget. This can be done by quantifying all the spreadsheets that you made earlier in which all expenditures were recorded. This can be done efficiently in excel. Through the help of budget software’s such as worksheet a whole format of expenditures can be made. This budget should reflect all the expenses, which should include the small routine expenses also. It will be perfect only if one is honest in recording everything.
- Keep on improving and changing your budget
Now, after making budget have a close look and analyze it. Find the areas of improvement in it. This can be done by defining the goal of budget i.e. to save money, manage your money or to pay off the debts. It can be improved by reducing the expenses; cutting spending’s such as luxuries or unnecessary expenses.
- Stick to the budget
The most imperative step in budgeting is that one should be honest and should stick to the budget made and should always try to find improvement in it. Set targets, such as make a goal to save at least $200 every month. If you find success in it, this means you are correct path on how to manage your money efficiently. But if you are unable to do that don’t give up and keep on trying. This can be done by identifying the mistakes you have done in the above steps and overcoming the reason.
Most important thing in budgeting is that keep on adjusting your budget thoroughly. The more you will analyze and understand your budget; it will help you in achieving your goals.