Budgeting is an art and not everybody can follow the rules. However, this doesn’t mean that you should not try. In order to do so, you must follow the advice we dispense below.
No matter your financial status, your marital status and the state of your debts or job, you need to be aware of the inflow and outflow of cash in your life and must also make changes to your habits so that you get more money. Learn budgeting basics below:
Track, track track!
You can never stick to a budget or even make one if you do not know where all your money is going. Quite possibly, you do not really know where your money is being spent. In order to do so, start keeping a track of your income and expenses from the 1st day of the month. Do it at least for a month. Record all your expenses, no matter how small and come back to the expenses tracker on the last day of the month. You can use a smartphone app, a paper or even an excel sheet.
Once you know what all you have spent and earned in the last month, analyze your data. Check where all the money you have is coming from and then check which all categories do you spend your money on. Do you spend more on entertainment or on fast food? Once the complete data is ready, you would likely be shocked to know about your spending habits. So cast a deep glance.
After you know what mistakes you have made in the past month and probably all your life, it is time to take charge and get ready for a change. You now know where all your money goes. Categorize all the expenses as ‘Essential’ and ‘Non-essential’. Generally, all our essential expenses are fixed but the non-essentials go overboard. Plan how much you would want to spend on each of the categories.
This is the last and the most difficult step in this process. You now have to follow all that has been planned by you. Envelope budgeting is a good idea for this. Make envelopes of money for each expense. In each envelope, keep the amount of money that you would like to spend on a particular category. Once the money vanishes, you are barred to use other envelopes. If, at the end of the month, you are left with some savings, transfer it to the savings bank account.