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.