29/08/2022
How do I create a budget?
Budgeting starts with tracking how much money you receive every month, minus how much money you spend every month. You can do this in an Excel sheet, on paper, or in a budgeting app—it’s up to you. However you track your budget, clearly lay out the following:
Income: List all sources of money that you receive in a month, with the dollar amount. This can include paychecks, investment income, alimony, settlements, and money that you make from side jobs or other projects, such as selling crafts.
Expenses: List every purchase that you make in a month, split into two categories: fixed expenses and discretionary spending. If you can’t remember where you’re spending money, review your bank statements, credit card statements, and brokerage account statements. Fixed expenses are the purchases that you must make every month. Their amounts don’t change (or change very little) and are considered essential. They include rent/mortgage payments, loan payments, and utilities. Discretionary spending is the category for nonessential or varying purchases for things like restaurant meals, shopping, clothes, and travel. Consider them wants rather than needs.
Savings: Record the amount of money that you’re able to save each month, whether it’s in cash, cash deposited into a bank account, or money that you add to an investment account or retirement account like an IRA or 401(k) if your employer offers one.
