How to Make a Budget
How to Make a Budget That Will Work for You
When you start spending your own money, it’s time to learn how to make a budget that will work in your unique situation. One of the best ways to begin is by keeping track of your spending.
In order for you to make a personal budget and one that you will be able to follow, you must know where your money is going. Until you get a handle on that, you’re going to be spinning your wheels and soon will become discouraged.
For those of you who don’t have a complicated financial situation, you can use the low tech method to see how to make a budget. Basically you will use a notebook and a pen to record your spending. You can record all of your cash expenses as they occur and then later summarize them into a more organized ledger.
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Those who prefer a computer will find it easier to learn how to make a budget. After collecting your information for the month, it’s easier to summarize them and enter the totals into the computer software program.
In addition to the various cash spending categories, you will also need to setup accounts for utilities, mortgage/rent, food, insurance, automobile, clothing, and as many others as needed to cover your financial picture.
You can use a spreadsheet like Excel to learn how to make a budget, but it won’t give you the reports that you may want to see. I prefer a good budgeting software program that will allow you to download your bank account transactions. This makes it a lot easier and you will see how to make a budget that works.
A good budgeting software program will help teach you how to make a budget. An important category is saving for retirement. Even if you’re young & starting out, start saving for retirement regularly.
Also set up a budgeting category for emergency items like auto repair or even medical expense. When you learn how to make a budget, you can annualize most of the fixed expenses & use the average for each month. Some expenses like insurance are paid semi-annually or annually as are real estate taxes.
Remember that a budget is a guideline and may have to be adjusted as you go along. You will learn how to make a budget that is not overly restrictive or you will not be able to follow it. Review it at least monthly and adjust where it is necessary.
Using a software program to learn how to make a budget will allow you to see quite easily if you are on track with your spending. It may surprise you to see just how those small amounts of cash spent can add up over the period of a year.
Making a few changes there can cover a shortfall in some other category. Learning how to make a budget is not so difficult. You will be able to find those unnecessary expenses that can be eliminated that will improve your cash flow.
Remember, when learning how to make a budget, changes are inevitable. The economy changes, prices change, and your own personal situation can change suddenly. Make a budget that is realistic and one that you will be able to follow. You’ll be glad you did.