Money is something that everyone worries about at some point in their life – and learning to create a budget is one of the most efficient ways you can manage your money. Everyone is capable of building a budget and making a few simple changes that will affect their financial future. Regardless, if you feel that your finances are under control or not, a budget will make sure that you are using your money the way you want to. Taking a little extra time to create a budget that works for your lifestyle will give you an idea on where your money is going and take you one step closer to financial freedom.
The idea of setting up a budget can be overwhelming but we can simplify it by breaking the task down into a few easy steps. Before you can really accomplish setting up a budget you will need to: track all your expenditures, classify your expenses, pick out a budget worksheet, and decide on a goal for your budget. Creating a budget will lay out a road map for your finances – the more time you spend setting up your budget the less you will be spending worrying about your financial future. So let’s get started!
Tracking all your expenditures is the first step in creating a successful budget; you can choose to do this anyway that works for you. Many people choose to collect hard copies of receipts while other tech-savvy folks keep a record on their smartphone. Whatever works for you – just do it! Start by collecting all your receipts or tracking your spending over a 2 week long period. Every receipt for every transaction should be kept for one week– even the $1.00 cup of coffee. By tracking each of your expenditures you can identify how you are really spending your money.
At the same time, begin to classify your expenses by dividing them into categories. Start with bigger categories or expenses that are considered essentials. Essentials are expenses or bills that you must pay like mortgage or rent, utility bills, groceries,