5 Simple Steps for Creating A Practical Personal Budget

Everyone needs to have a budget, regardless of whether they are making $100,000 per year or minimum wage. Even if you make a decent amount of money, you will still encounter financial problems if you spend every dollar you make. The good news is that setting up a personal budget will help you stop living paycheck to paycheck. Here are five simple steps for setting up a personal budget.

Keep Track of Your Spending

Many people are spending too much money on unnecessary things. You should keep track of your spending with a small notebook or your smartphone. You should write down every purchase that you make, regardless of how big or small it is. You should also make sure that you keep track of all of your receipts.

Download A Budget Template

5 Simple Steps for Creating A Practical Personal Budget

It will be much easier for you to keep track of your spending if you use a template. You can use a program like Excel to keep track of your spending or download an online template.

Gather All Of Your Paychecks And Paystubs

Before you can create a budget, you need to know how much money you are bringing in each month. That is why you should get all of paychecks and paystubs together. If you get alimony payments, social security or pensions, then you want to make sure that you get all of that information together also.

Create Your Budget

Once you have calculated your total monthly income, you want to record it on your spreadsheet. After that, you want to total the amount of money that you spend each month. Each of the items that you spend money on should be placed in its own category. You want to be as specific as possible. For example, instead of placing food in one category, you want to divide it into groceries, fast food and restaurant meals. This will make it easier to find where you are spending money needlessly.

Set A Goal Each Month

Every month, you should set a goal to save money in each category. You should look for creative ways to cut unnecessary spending so that you can reach your goal every month. You will need to keep track of your expenses every month in order to see how well you are doing.