Are you bothered with your monthly budget issues? If you are tired of losing your money before you get to the end of the month. We will help you with some easy and short approaches to get over this.
Here is a step by step guide which will help you to create a successful monthly budget. It is tricky but not tough to manage your personal budget. It will help you with getting rid of debt, bills, taxes, and developing your wealth too. For this, there are various tools, such as a spreadsheet, which can be used for managing personal budgets.
Follow these easy steps to create a personal budget
1. Follow these easy steps to create a personal budget
First, you have to make a calculation of your net monthly income. It can be the money coming from your office salary and with the extra work or freelancing you are doing to gain an additional source of income.
Take an example:
Make a column in your spreadsheet as “Income”. Here add all your income sources such as:
- Day Job: INR 35,000
- Freelance: 4500
2. Track your monthly expenses
It is imperative to track or categorize your daily payouts. It will make your adjustments easy and help you with tracking where your money spent too much and from where you can cut off. Also, it will include your monthly rent, internet bills, utility bills, etc.
So, you have to list these expenses as:
- Rent: INR 7500
- Electric Bill: INR 1500
- Internet Bill: INR 1000
It is better to list out every single expense in the spreadsheet. It will make your calculations easy to track the budget.
3. Set your finance goals
Review the list of your bills and other expenses mentioned in the spreadsheet before you start to set the financial goals. Create a separate list of your goals you want to accomplish.
It can be a short term or long term goal. Short term goals would not take more than than a year to achieve while the long term goals such as loans, retirement savings, children’s education will take a long time to achieve.
It is important to identify your priorities before you start with planning your budget.
Examples of setting financial goals:
- Make sure you are not in debt
- Create an emergency funding of 3-6 months
- Fund your retirement account
- Save your money for down payments and home loans
4. Design your budget
Maintain your monthly budget with a line of needs and wants – fuel is a need while a music subscription is a want. Separate these wisely and work on your needs to save money. You can use flexible and fixed expenses to get a better sense of what you have to spend in the coming days and months.
Break down your monthly budget according to the requirements and other basic needs. It will help you to maintain your monthly budget, and you can save more money than previously.
Making adjustments with your budget will help you to plan for lots of things in the future, such as a car, home, retirement plans, etc.
- Rent: INR 7500
- Gas: INR 1500
- Groceries: INR 2500
- Emergency fund savings: INR 10,000
- Car Savings: INR 8000
- Debt repayment: INR 10000
5. Put your plan into action
When you plan your whole budget, then its time to implement it as you have to take action now.
Identify your income and other expenses and separate between needs and choice. Take a look at the budget spreadsheet. You have made to run the whole monthly budget. Revise the expenses and put them into action. Decide what you can deduct from the budget and what you have to include.
Also Read: What is Income Tax Refund? How to claim it?
6. Implement, maintain, and monitor your budget
After identifying how to implement your plan into action. You have to monitor your budget and expenses and adjust them according to the needs. Manage your money for your future plans, such as saving money for retirement plans, buying homes, cars, children’s education, and other necessities.
It is an excellent option to arrange a budget meeting with your family members, as it will make it easy for you to make the right decisions as per the needs and requirements of your family. It can be scheduled weekly so that you can look at the budget and make changes according to the demand. By doing this, you can achieve the financial goals.
A final note
If you still not having a budget maintaining sheet or budget plan. Create it!
And follow the above steps by maintaining all the records of your income in the spreadsheet to get out of the financial crisis and build your wealth for the secure future.