Learning how to create a budget is very important and failing to create a budget could cause you to go into debt and to suffer from bad credit. When you overspend and miss payments, your credit score, financial health and family will suffer. Therefore it is important to create and maintain a budget. I like to use these 3 easy steps to help me create a budget.
BONUS: Open a FREE Checking Account at Capitol One and earn interest each month!
Step 1 – Evaluate Your Income
- Before you can successfully create your budget, you must know how much income you are bringing in. Sit down (with your spouse if you are married) and evaluate your monthly income. If your paycheck varies each month, then you should use an average of your lowest and highest paychecks. Using this method will give you an average of how much you are receiving in income each month.
Step 2 – Calculate Your Monthly Expenses
- Write down all of your monthly expenses and use a high average. I suggest using a high average to avoid underplanning. I also use a simple excel spreadsheet that I save on my computer and it helps me monitor all of my monthly expenses including electricity, savings, mortgage/rent, tithes, cell phone, cable, etc. Also, Microsoft excel has plenty of templates you could use to create a budget. If you would like a copy of the spreadsheet I use, please email me at email@example.com.
Step 3 – Always check your budget before you spend
- I get paid twice a month (as most people do) and prior to making any purchases or paying any bills, I consult my budget. I do this twice a month since that is how often I am paid. I plug in the total amount of each bill and the total amount of my paycheck. This technique allows me to see how much money I have left to save or make any additional purchases. This technique has saved me so much money and has caused me to become more financially healthy.
These are the 3 easy steps that I use to manage my budget. What steps are you currently using? Please comment below and don’t forget to share and subscribe!