How to Create A Budget

Budgeting can be an easy process once you set the foundation. Creating a tool to capture your finances, expenses, savings, etc. will help you to stay on track with your financial goals. Budgeting doesn’t have to be a daunting task; in fact, it can be a game-changer for your financial well-being.

If you’ve never created a budget before, you’re probable wondering why should I create one anyways?! Think of it this way, having a budget is like having a financial roadmap that guides you; it keeps you in place to organize your money wisely in order to avoid financial stress at the end of each month.

There are 5 key tips to consider when creating a budget.

1.Know Your Budget

Before you put pen to paper when developing a budget, of course you need to first know how much money you are making per month. Identify all sources of your income (salary, side hustles etc.) and mark down how much money you make. If you are unsure of how much money you make with your side hustles estimate the figure. Your total income will provide the foundation to your budget.

Personally, in order to save more money when I develop my budget I always mark my income a couple of hundred dollars less than so I can easily save extra money each month.

2. Identify All of Your Expenses

It’s time for one of the most intimidating aspects of developing a budget. Write down ALL of your expenses. When noting your expenses identify both your fixed (for example, rent/mortgage), and variable (for example, shopping for clothes) expenses. These are all important to take note of as it will help you to see where exactly your money is going.

3. Set Realistic Financial Goals

Where do you want your money to go? Are you saving money; if so, what are you saving for? These are a couple of questions to consider as you are developing your financial budget. It’s important to have realistic, CLEAR financial goals to keep you on track. Having these goals will also keep you motivated and focused. It will encourage you to actually stick to your budget.

4. Embrace a Budgeting Rule

If you follow common money advise rules, you’ll often see mention of the 50/30/20 rule. What that means is that you are encouraged to allocate 50% of your income to needs (fixed expenses), 30% to wants (variable expenses), and 20% to savings or debt repayment. Following this budgeting rule often ensures a budget that allows you to be “strict”, while also having the opportunity to treat yourself as you plan for and secure your financial future.

Personally, this is a rule that I generally follow when developing and following my budget. It was extremely helpful when I was paying down my student debt.

5. Track and Adjust

Like life, a budget should be present and fluid when necessary. It’s so important to track your spending and entering in figures (for example, your expenses), consistently in your developed budget. You can do this in the traditional manner with pen and paper or using digital tools. Regularly review your spending against your budget to ensure you’re not overspending. And always remember – life happens, and there will be times when unexpected expenses arise and that’s ok!

Personal Budgeting Tips that I Follow 

1. Create a budget using a salary that is a few hundred dollars less than what you actually make. This will provide
   you with an opportunity to easily save more money.
2. Be honest with your expenses and list them all out. To do this you may have to review your financial accounts to see where you spend money often. Also, consider including your savings accounts as part of your budget expenses so you don’t have to stress about them at the end of the year.
3. Make time to review your budget weekly to ensure you are on track! Review all your receipts, and online statements. Input the figure and see if you are doing well or need to improve.
4. BONUS! Find an accountability partner if you can. This person should be someone you trust and are comfortable talking to about money. They are to encourage and motivate you to adhere to your budget.