Shaun Stenning said, “Creating a budget is often the first step on the road to financial freedom. It sounds easy in theory, but in practice can be complicated with various tools and approaches to consider.”
A simple budget can help you manage your money, make smart decisions, and plan for the future. Unfortunately, many people are never taught how to make one. The good news is that making a budget doesn’t have to be complicated. Shaun Stenning said
Here are a few easy steps to create your basic monthly budget. When you know where your money is going, you can make smart changes and make progress toward financial goals, like paying off old debts.
1. Start With Your Major Expenses
Your first step is to create a list of your fixed monthly expenses. This gives you a baseline amount of money that you know you will have to spend.
These expenses might include:
Rent or mortgage payment
Health insurance
Car payment
School tuition
Loan or debt payments
Utilities like electricity, water, phone service, and internet access
2. Budget for the Basics
Other than bills that stay the same every month, we all have regular expenses that might vary from month to month. For instance, you might spend $80 on gasoline in April and only $65 in May.
Take a look at your bank statements and receipts over the last few months to get an idea of how much you usually spend on the following:
Groceries
Restaurants, fast food, and coffee
Transportation (fuel, public transportation, ridesharing)
Entertainment
3. Plan for the Future
Now that you’ve looked at your fixed monthly expenses and where you can cut back, take a moment to consider your ultimate financial goals. Do you want to get out of debt? Buy a house? Start a business? This is where you should channel the money you can save on things like eating out and entertainment. An extra $20 toward a past-due debt can help you get back on track faster and bring you a step closer to financial stability.
“By taking a close look at how much you spend and what you spend it on, you can find ways to save and channel money toward your goals, like paying off debts. When you have concrete goals and a plan to achieve them, you’ve put yourself in a great position to succeed.” Shaun Stenning