How to Budget Money 101 (You Know You Need To)

Budgeting. The nine-letter word in personal finance either excites you or conjures up images of torture.

After reading this article, you’ll have a better understanding of how to budget money easily so that you can spend less, save more for your goals with sinking funds, and continue improving your money habits along the way!

Budgeting is a financial exercise highlighting your earning, spending, and saving habits. It provides you with an overview of exactly how much money you’re making, how much money you’re spending, and how much money you’re saving over a specific period of time.

Your budget can and should help you identify where you’re spending too much of your hard-earned money. But, at the same time, it can also help you identify how you can better put your money to work for you.

How to Budget Money Part II: How Do I Make a Budget? What are the Steps Involved?

Step 1: Totalling your income As you start adding up your income, keep in mind that any amount of money coming in from any source is considered your income. Once you have all of your income added up and categorized based on the type of income, it’s time to move on to step 2 of how to budget money.

Step 2: Totalling your expenses One of the most overlooked outcomes here is not that totaling your expenses indicates just how much you’re spending, but that it provides actionable insight to help you understand how and where you should be allocating your hard-earned money.

Step 3: Let’s calculate! And now… it’s time we’ve all been waiting for! It’s time for you to actually “calculate” your budget. Again, the calculation is quite simple. By minus your total expenses (calculated above in step 2) from your total income (calculated above in step 2), you’ll arrive at a number that’s either in green or red, so to speak.

Step 4: Create your spending plan The insight you’ll gain by knowing whether or not you’re in the green or red, along with exactly how or where you’re spending your money, can and will help you understand how and where you should be allocating your money.

Now that you’ve got the know-how when it comes to budgeting your money, it’s time to put the above to good use to reign in on your spending habits. Above all, you must remain consistent and stick things through so that you can continue to improve the relationship you have with your money now and well into your financial future.

Swipe Up To Read More about  How to Budget Money 101 (You Know You Need To)

Read more

10 Steps To Creating A Sound Financial Plan

Money Lessons From 5 Favorite Classic Novels

Pros and Cons of Self-Employment