How to Create a Budget
Sometimes it’s just hard to save money and keep track of your spending. Sure, online banking helps you to see exactly what you have been spending money on, but it won’t stop you from spending money and it won’t tell you when you’ve gone past your self-imposed limit.
The best way to prevent overspending and to promote saving is to make a budget for yourself and your family and stick to it. That way, you will have saved money for a rainy day and have built up some good habits when it comes to saving money.
Step One – Analyze your income
Look at your paychecks. On average, how much do you make a month? Is your paycheck stable? Do you know how much you will get every month or is it a surprise sometimes.
The less stable your paycheck, the lower your budget should be, just in case. The reason you want to save money is for those unexpected expenses.
Step Two – Look at your bills
Once you have a number for your average monthly income, subtract the bills that you know for sure or can average like rent, utilities, car payments, cell phone payments, and insurance.
After this subtraction, you will probably a much smaller number, and the rest of this number is certainly not your disposable income.
Before you assume that the rest of the money is yours to spend or save, consider the necessities that you could save money on such as groceries and gas. You can always look for sales or clip coupons for groceries or ride a bike or carpool to save money on gas.
Step Three – Set a savings goal
Now that all of your bills are accounted for, the rest of the money is either spending money (which you can’t really cut out); you can start calculating how much you will allow yourself to spend, saving the rest.
A good thing to try is to save 50% of your disposable income.
As for the spending money, always keep the figure that you are allowing yourself to spend, and try to keep a running total (either in your head or written down) with you at all time. At the end of each month, review what you spent money on and see where you can make cuts.
Try and increase your saving number and decrease your spending number each month and before you know it, you will have a great nest egg, just in case.