Create a Budget

Budgeting is an essential skill that everyone should, at the very least, know the basics of.   A budget is a way that you can track and monitor just how much money you make or spend over the period that you are monitoring.  Valuable information is gained during the process of creating a budget and also the review of what is contained on the budget.  So, what this means, is that you are able to visually see what are all of your sources of income, compared to the outflows of money for expenses such as  rent, mortgage, cable, internet, cell phone.

There are different types of budgets that are available to the individual, or the business owner.  What budget you do, will be dependent on what you are trying to see or learn about.  Remember, that at the core all budgets are created similarly, in the fashion of inflows of money compared to outflows of money.  It is really that simple, in that you will need to add up the sources of incoming money and compare that to the outgoing or outflows of dollars to support the expenses that you need to pay.

Budgets are Simple

Don’t fret, once you start plugging descriptions and amounts into a spreadsheet, or writing them onto a paper, you will see that the hardest part of a budget is ensuring that you don’t leave anything out.  First thing you will probably encounter when you work on a budget, you will find that it is hard to know what should or shouldn’t go onto the budget.  Right?  You will need to think about what you currently spend money on, and then list what you plan to spend on the budget for the upcoming month.  There are a few ways that you can go about getting some tips or reminders, and that is by looking at any old receipts that you have lying around.   But that may be a little hard, as most of us toss incidental receipts as soon as we get home and empty out our pockets.  And if you’re like me, you may just toss those lunch receipts as you’re standing in line at the lunch counter.  Or you may tell the waiter that you just don’t need a receipt today.   But in order to get a solid handle on your budgeting for the month, you’ll have to start taking those receipts home to start putting into a budgeting spreadsheet.  You’re just in luck, we’ve created a sample personal budget and put it into our Google Docs folder and shared it with the world.  We suggest that you jump in there and get yourself a copy and start to fill it out.

There are typically two sides to a budget, and those are your projected spendings versus your actual spending.  As you approach a new month, the goal with a budget is to stay within the amount that you plan to spend on everything over the month.  But if you’re like most people, staying under budget can be difficult and even more difficult once you get started.  But it is essential for building your wealth that you have a good handle on what you plan on spending your money on, and not spending it frivolously on eating out, entertainment, or other fun items that you really don’t need.

It is about Balance. 

As you move through life, you have to enjoy it, and make sure that you find pleasure in the things that you want to do.  And to do this, and find enjoyment, as you know a lot of types of enjoyment can be expensive.  And if you like Disneyland, which is quite fun, you’ll see that some enjoyment or fun activities are really expensive.  Disneyland is about $150 per adult, the last time I went in 2017.  So a budget will help you determine how much you are making, and then allow you to see what you have left over after you pay your bills and required expenditures to use for entertainment.  If you have just a little left over, you may not be able to afford a trip to Disneyland, and if you have a lot left over  you may be able to fit in a trip.  That is basically how the process works, and making tough choices is typically what a budget is all about.

Hopefully, your budget will help you to curb your spending and to make better choices when it comes to either spending money or putting it away into a savings account.  To continue with this series, please visit out page ” How to Save Money