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3 Easy Steps to Creating a Personal Budget


If you’re like most other people then money seems to go out of your hands faster than it comes in, through job loss, divorce, business failure, illness, starting a family or many other of life’s surprises, but it doesn’t have to be like that if you follow a few simple rules and become a good money manager.

One of the most important decisions you will ever make is learning how to create a budget. You will learn how easy it is to develop your own budget and you will discover how to change your attitude and beliefs about budgeting so you will soon be in control of your personal finances once again.


Step 1

Calculate your monthly income - To start a successful budget you need to know exactly how much you earn and where your money comes from. This gives you a starting point because you can’t budget properly when you don’t know how much you can spend.

Step 2

List your monthly expenses - This is where you need to be honest with yourself and list down exactly what items you spend your money on. Let’s start with a few obvious ones to get you started, groceries, fuel, electricity, rent, entertainment, and probably the most expensive of the lot…kids!

Subtract your expenses from your income - The easiest way to do this is either on a piece of paper, a ledger book, or in a spreadsheet program such as Excel.
Create a heading called Income and list down from where your income comes from. Then underneath create a heading called Expenses and list down all of the items you spend your money on.
Then next to each item note down how much each item is per week, fuel maybe $50, groceries might be $100 and so on.
After you have finished this then total up your income, total up your expenses and then take away your expenses total from your income total. What you have left is discretionary income, or ‘extra cash’.

Step 3

Set goals and allocate your additional money - How to create budget is the easy part, now you’re faced with the discipline part. If you’re serious about getting your financial goals back on track then you should do update your budget at least weekly.