How to Create a Budget

Without one, you may not reach your goals, like buying a home, paying off credit or traveling the world. A budget is a key tool to help you manage your money and work towards what you want in life. Let’s break down how to make a budget that works for you.

Figure out your income First, add up all the money you make each month. This includes your job, any side work, and other sources of cash.

List your expenses Write down everything you spend money on. Don’t forget things like:

• Rent or mortgage
• Food
• Bills (electricity, water, phone, etc.)
• Transportation
• Entertainment

3. Set financial goals Think about what you want to achieve. Do you want to save for a vacation? Pay off debt? Build an emergency fund? Write these down.
4. Create spending categories Group your expenses into categories like “needs” (rent, food) and “wants” (eating out, new clothes).
5. Choose a budgeting method There are many ways to budget. A popular one is the 50/30/20 rule:

• 50% for needs
• 30% for wants
• 20% for savings and debt payoff

Stay motivated Remember why you started budgeting. Celebrate small wins to keep yourself on track.

Track your spending Keep an eye on where your money goes. You can use apps, spreadsheets, or even a notebook to do this.

Review and adjust Look at your budget often. If it’s not working, make changes. It’s okay to tweak things as you go.

Resources:

NerdWallet: Website with budgeting tips and tools (www.nerdwallet.com)

Mint: Free budgeting app (www.mint.com)

You Need A Budget (YNAB): Paid budgeting tool (www.ynab.com)

FAQ:

Q: How often should I update my budget? A: At least once a month, but weekly is even better.

Q: What if I can’t stick to my budget? A: Don’t give up! Adjust your budget or find ways to cut costs. It takes practice.

Q: Should I use cash or credit cards? A: Use what works best for you. Some people find using cash helps them spend less.