Now you should have all your income and all of your expenses for one month. Now it’s time to start telling your money where to go.
To really start getting detailed, you need to ask yourself what the main purpose of your budget will be.
If getting out of debt is the main reason, then the emphasize should be placed on using as much money as possible to pay down debt.
If retirement, investing or saving is your motivation for a budget, then it should be geared towards exactly that. Having strong goals will help you stay on track with your budget.
A budget doesn’t have to be boring. They can actually be fun. Best of all, they are not difficult! When you are getting started you have to know 2 main things to create a budget:
- How much you make
- How much you spend
So let’s start with your income. How much money do you bring in after taxes and deductions? This is called your net income. This is the actual money you have to spend every month. This includes any income you would make in a month.
If you have an irregular income, like people in the commissioned or service industry, then you have two options…
Yes, this is an actual budget that you can create for yourself in less than 5 minutes. An actual 5 minute budget.
It begins, as every budget begins, by writing down your income for 1 month, then write down your expenses for 1 month.
Budgets don’t have to be boring, and this one is so quick, it doesn’t have time to get boring.
You can track your expense for a month to get an idea, or just estimate for this budget.
If you are in the group of people who spend more than their income, which many people are, you will have to eliminate the least important things, until your spending is equal to or less than your income.
Now decide what is important to you…