With the right tools and information, you can quickly build a budget that is easy to stick to. Here’s how to create a simple and practical budget that anyone can follow.
Review your income and expenses
Most budgeting plans recommend tracking income and expenses for three months. If you’re pressed for time, though, you can look at one month and review your spending and income throughout this time. Review your checking account details and credit card statements to see where your money went and what funds came in.
Compare income and expenses
Hold up your two numbers from the previous step and see how they compare. If your income outweighs your expenses, you’re doing great! If it falls short, you’ll need to trim your costs in the next step or look for ways to boost your income. If the numbers balance each other out, it’s still a good idea to trim expenses to leave some budget wiggle room.
Assign a dollar amount to every expense category
Next, review how you spend your money and assign a realistic dollar amount to each category. Include fixed and changing expenses as well as savings contributions.
If you’re pressed for time or overwhelmed, you can broaden your categories. For example, instead of setting a separate number for groceries, work lunches, and dining out, you can set a larger number for all monthly food expenses.
If your income does not cover your expenses or just barely covers them, look for ways to trim the fat however possible. Jot down your dollar allocation on paper, or create a digital version of your budget and upload it to your personal devices for easy access.
Use technology
Harness the power of technology to help you track and manage your expenses accurately. A budgeting app can make tracking your monthly spending super-easy. You can upload your budget and track expenses throughout the month. An app could even let you know how much you’ve spent in each category and warn you when you’re approaching the limit.
Live with your budget
You built your budget and are now ready to live on a budget! As you spend throughout the month, remember your monthly expense categories. Try to take a few minutes at the end of the week to track your progress and reassess. This will help you keep aligned with monthly budget plans as you move forward to create a budget that consistently works for you.
If you find it too hard to keep track of your spending throughout the month, the money envelope system can make it easier. Simply withdraw cash amounts for each non-discretionary expense category in your budget at the start of the month and only use the money in these envelopes to pay for these costs throughout the month.
Review expenses and adjust accordingly
Once your budget is up and running, review your spending plan regularly to see if it’s still working for you and adjust as needed.
At Jovia, we’re here to help you manage and maximize your money. We hope you found this article on planning your personal budget helpful! Check out our other money management articles!