How to make a personal budget?
Creating your first budget can be extremely overwhelming. So much, in fact, that only 40% of the population has a monthly operating budget. But it’s worth it. Indeed, developing a monthly budget will allow you to reduce your expenses, get out of debt and allow you to collect money for your old age.
If you’ve decided to take control of your finances, but you don’t know where to start, follow our tips and tricks to learn how to make a budget and stick to it.
Tips for making a budget:
1. Make your budget with a personal finance book
In order to make your budget, start by getting a notebook specially dedicated to this task. So every time you make your budget, everything will be at your fingertips. You can also rely on your old budget and even compare them.
If you are comfortable with computers, use spreadsheet software such as Excel or better still Google Sheets which is free. You can create tables with the necessary columns to visualize your budget.
2. Define your income to make your budget
To begin, it is important to define the sum of your monthly income. Enter in your personal account book
- Your monthly salary
- Government allowances
- The pensions you receive, etc.
All the cash inflows you receive each month should be noted there.
3. Enter all your monthly expenses to make your budget
Then calculate how much it costs you to live. Every month you have to pay bills, goods and services. Calculate all these expenses. This includes among others:
- the rent
- the bills
- the insurance
- the grocery store
- car related expenses
- And so on.
All expenses, even the most futile, must be noted in your personal budget.
If you are looking for a way to save on your insurance, this article will please you: How to pay less for car insurance?
4. Calculate your income VS your expenses
Then take your total income for the month and subtract the total amount of your expenses. Depending on what’s left, you can allocate some for emergencies or for your savings.
If you realize that your expenses exceed your monthly income, there is a problem.
Take advantage of this exercise to review your priorities and make adjustments to your lifestyle in order to reduce unnecessary expenses as much as possible.
5. Pay your bills on time for a stable budget
It is imperative to always pay bills on time to avoid late fees and/or interest. It’s hard to manage a budget when there are unpaid bills and growing fees or balances to pay.
When you receive your bills, get into the habit of marking in the calendar the deadline for payment required.
As payments can take a few days to be applied to your accounts, make sure to pay your bills at least 5 days before the due date.
The agenda or the calendar is the best tool to pay your bills and accounts on time! Come quickly discover our article: Make a calendar for free.
6. Avoid credit to stick to your budget
Credit sometimes saves our lives, but too often it leads us straight to financial nightmare. We must avoid using credit for everything and for nothing, so as not to get into more debt. In addition, credit cards have interest which lengthens the repayment time.
Keep only one credit card, preferably the one with the lowest interest rate, and use it only for emergencies. To avoid paying interest on your credit account, repay the amount owed as soon as possible. It’s one of the best tips for sticking to your budget..
7. Save every day to better manage your budget
Even though times are tough at times, it’s important to save for even tougher days. As soon as you have extra money, don’t hesitate to put it aside for the more difficult end of the month, for example. This can certainly help you in the event of major financial problems.
When you made your budget and wrote everything down in your notebook, you surely noticed that some expenses were superfluous. Is the $7 coffee every morning necessary? If you have this habit, imagine how much you could save if you made your own coffee in the morning instead? This is just one of the tips for sticking to your budget.
8. Monitor your bank accounts to stick to your budget
These days, very few people pay in cash. Almost all of us are used to paying with our credit card. But by doing so, it is easier to spend lavishly!
It is important to keep an eye on what is happening in our bank account in order to manage our budget well. Omissions, errors or excesses may occur, so it is better to keep up to date on our banking transactions.
Making a budget is very important, but sticking to it is just as important. To avoid unpleasant surprises, always respect your budget.
Sticking to your budget is mainly due to your motivation to do so, but it can greatly help you to keep a personal account book, as well as to keep an eye on your bank account.
Fortunately, today we have access to all of this on our phones and tablets. Keep a scanned copy of your budget, and get your bank’s mobile app to do your transactions.
10. Seek help from a financial advisor
If you’re having trouble sticking to your budget, seek help from a financial advisor. This can help you find appropriate solutions for the repayment of your debts and your short and medium-term financial objectives.
Most banking institutions offer this service, but you can also contact an independent financial adviser or an agency specializing in financial recovery. Do not hesitate to take advantage of this service, before arriving at the edge of the abyss.
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