Personal Finance

How To Create Your First Budget

Majority of the population lack the knowledge on how to create their first budget.

One of the main reasons is that, the word budget is associated with deprivation and as such, most people never create one.

If you are new to budgeting, here’s a simple way on how to create your first budget.

Steps On How To Make Your First Budget

These are the steps on how to create your first budget:

  • Get a copy of the last 3 months of your bank statement.
  • Using a note pad and pen, write down all your expenses, debt, and liabilities.
  • On your note pad, write down the following categories, Income, Household, Food, Personal, Transportation, Entertainment, and Miscellaneous.
  • Next, go through your bank statements looking for transactions that fall into one of these categories and jot them down.
  • Now take an average of each item into to determine your average monthly allocation for your budget.
  • Add up all your income(s) and Expenses.
  • Subtract your total expenses from your total incomes and if you have a surplus, awesome. However, if you end up with a deficit, then there is work to do.
  • Here is a link to get a simple budgeting spreadsheet.

Having a budget is the first step to achieving financial security.

The first time you try to create a budget might seem difficult, however with time and more practice, you will become a pro at this.

Budgeting should be fun and should never be associated with lack or deprivation.

A budget is basically a plan or road map for you to achieve your financial goals.

If you want to build a house, you need a blueprint or plan on what type of house you are trying to build.

You must have a plan for your financial life and it all starts with your first budget.

Treat Your Personal Finance Like A Business.

7 Step Beginners Guide To Personal Finance Management.

Lifestyle Personal Finance Wealth Creation

Cash Is King

Following the principle of “Cash is King,” you can change your life forever.

Life will be less stressful financially and you will be taking your first major step toward “financial security”.

“Cash is King” is an easy principle to understand and for some, however, it may be difficult to follow.

We live in a world of credit and we do not respect or understand the value of cash.

If you follow this simple principle of “Cash is King” you will start on the road to “financial peace of mind”.

Why Cash Is King

Here are two basic suggestions on how to follow the principle of “Cash is King”:

When you are paid make sure you allocate enough money to pay your rent/mortgage, utilities and any other fixed expenses you may have.

Any amount of cash that is left should be withdrawn from your checking account to be used for food, clothing, gifts, entertainment, gas, etc.

The best way for you to control this cash would be for you to create a budget.

Also, you can adopt the envelope system.

The envelope system entails labeling envelopes and allocating funds to each envelope representing an expense.

For example, you could label an envelope groceries and each paycheck, you allocate an amount of cash that you place in this envelope.

Now, remember that this cash is the only way you can spend. Once you have used all your cash there will be no spending until your next paycheck.

This is tough! No credit/debit cards? You must be kidding!

How will I ever get through to my next payday without using my credit/debit cards?

Stick with “Cash is King” and manage your money.

Start by finding the cheapest places to buy gas, run your errands more logically and take your morning coffee from home instead of buying that latte every day.

You will have to find new ways to manage your cash and the first few weeks will be the toughest.

You may even run out of cash before your next payday, however, you will stick to the principle “Cash is King” and eventually find “financial peace”.

After several weeks it will get easier to manage your cash and you will be surprised to find extra cash available before your next paycheck.

What will you do with that extra cash? Many say put the extra cash into a savings account or pay a little extra towards one of your debts.

The choice is yours to do whatever your heart desires.

By following this principle, you will be on your way to establishing a secure financial future.

The Road To Financial Freedom.

Treat Your Personal Finance Like A Business.