Tired of running out of money at the end of the month? Read on to learn how to create a budget and what to add to your budget list!
About 80 percent of Americans workers live paycheck to paycheck.
If you’re one of these people, you certainly know how it feels to live on the edge of financial uncertainty. If you suddenly lose your job or fall ill and are no longer able to work, you’ll likely have financial trouble.
The good news?
You can kick out financial uncertainty out of your life by drawing a smart budget and sticking to it. However, creating an effective budget is easier said than done.
We’re here to help, though.
Continue reading to learn how to create a budget and what to include in your budget list.
Have a Clear Picture of Your Income
Do you really know how much you make every month? No, we aren’t talking about a rough estimate or ballpark figure. We mean an exact figure.
If you’re anything like most people, you probably don’t have a clear picture of your income. Yet, the first step to creating a budget is having a grasp of the amount of money you’re making.
If you have a regular job, the amount of money you’re making is what remains after you take away taxes, deductions, and fixed living expenses such as rent, water, and energy. If you have a job and a side hustle, your net income constitutes what you make when you combine the two incomes.
You can even use a chart maker to create a visual presentation of your income.
Once you know how much you’re working with, proceed to the next step.
Flesh Out Your Needs
Your needs are those expenses you can’t go without. These are things like groceries, commute costs, cable television, internet, and whatnot.
List them down and establish what they cost per month.
Bear in mind that your needs are those expenses you absolutely must incur. These are primary needs. If you’re paying for home internet but don’t work from home or don’t really need it, then that’s a secondary need.
Stick to your primary needs, month in and out. Don’t fall for the temptation to spend money on something that isn’t on your needs list. For instance, if you are paying for a certain internet package, stick to it. Don’t upgrade it without any justifiable reason.
Important Things to Include in Your Budget List
In addition to the necessities, there are important things you need to include in your budget list.
Saving for a rainy day should be in your budget this year. Did you know the average American can’t settle a $400 emergency bill? Putting some money away every month for emergencies.
If you don’t have health insurance, you need to include this item on your budget list. Saving some money every month will help you raise the amount you need to pursue a health insurance policy.
Create a Smart Budget!
Creating a budget and sticking to it is an effective way to stay on top of your finances and work your way toward financial freedom. With this guide, you now know how to draw a smart budget, as well as important things you should include in your budget list.
Need more money tips? Keep reading our blog.