Budgeting is a key skill in managing your money that you will use all of your life. The goal in budgeting is to make sure your essential living expenses are fully covered on a continual basis and to make conscious decisions about any remaining money. Your expenses should not exceed your income (or aid/allowances), and if they do, you will need to consider options to increase your income, reduce your expenses, or both.
There are many ways to create a budget. Inceptia recommends the following steps to creating a budget:
- Write down all income and anticipated expenses for a period of time
- Track your actual expenses for a period of time
- Compare your anticipated expenses to your actual expenses
- Adjust your budget according to this evaluation
- Monitor and track your spending over time, adjusting when necessary
The best budgets are created from your actual expenses. Here is a Financial Planner worksheet to help you get started. If you find a budget worksheet that doesn’t fit your actual expenses well, seek another worksheet, or create one on your own. There are also excellent budgeting apps that can help you budget.
Once you master the art of balancing your income and expenses, you’ll want to look at any money that you have left over. You have some choices to make with your discretionary income. Plan your spending to the extent that you want to. Revisit your budget if you overspend in a given time period. Consider setting aside money to build a savings, contribute to a retirement fund, or invest.