Posted by Occasionally I post about personal finance because it’s critical to overall well being. You can’t show up and be your best self if you stress over money, so here is a post on one of the fundamentals to personal finance; how to create a budget.
If you need to make a budget, chances are you haven’t been tracking your expenses. Knowing where your money goes is step one. Create a mindset for wealth!
For this, you have two options; meticulously review bank and credit card statements over the last 3 months or just start where you are and record every expense (even the small ones) for 3 months.
There’s a lot of apps available to make this easy if your trusting enough to link up your accounts.I recommend 3 months because things pop up and a three month window is enough to get a solid baseline.
It’s not easy, but putting in the effort here will pay off in so many ways!
Once you have this, you need to sort the expenses. You can choose your own categories, but however you sort them, they will be your categories for your budget.
Once you have them sorted into buckets (essential bills, food, clothing, entertainment, etc.) then you can see where your money has been going and where you need to adjust.
A budget is a framework to give you direction on how you put your money to work. Not having one leaves you wondering where the money went. It also gives you more control on how you manage your money.
Being rich or poor has very little to do with how much money you make. It has everything to do with how you use the money you make.
A good budget will help empower you to put your money to work. Give every dollar a job to do! Some of which should be making more money (high yield savings or investments).
I hope this post helps you create a budget. If you’d like to read more on this topic, just let me know in the comments below. Thanks for reading!