So many people I talk to are still yet to create and use their own personal budget, with most finding the mere word budget bringing them out in a cold sweat each time!
While it’s true that the mention of undertaking any kind of personal budget is often spoken of in negative terms, the value of having a personal budget plan in place cannot be stressed enough in relation to its importance in every single person’s life.
If you’re yet to make a budget for your own personal use, here is a quick step-by-step guide to getting the most essential information needed into one – and all painlessly!
Dig out every single piece of financial document that you can, such as bank statements, recent bills and all other documents, which state your income and expense sources. This way you can gather a monthly average which is a key process to creating a budget.
Write down all of your income, including every source here. If you are a freelancer, you may find this part slightly difficult if it varies but add a practical estimated figure here instead.
Write down all of your expenses, or those that you expect to incur over every month. This is basically everything that you spend money on from mortgage and rent payments to groceries and entertainment. For those figures that change slightly from month to month, place a practical estimation here instead.
Review this budget once you have all your information. Ideally you should have enough income to cover your expenses, perhaps even with some left over. This indicates you are on track and can cover the months ahead. However, if the budget shows expenses are far higher than income, you can then work on doing something about it.