HOW TO MAKE A BUDGET

Here are a few simple tips on how to make a budget:

1.  DETERMINE YOUR INCOME.  The first part of making a budget is to determine your income or how much money you receive each month.  This includes compensation, professional fees, rental income, royalty fess and dividends that you do not invest.  You can use computer softwares to organize these details or the paper and pencil method will also do.

2.  TRACKING YOUR MONTHLY EXPENSES.  I have a post regarding monitoring your daily expenses.  By doing this, you will know if you are spending below or above your means.  List everything down no matter how small you may think it is.  You can also break them down into categories.

3.  ANALYZE.  Once you know where your money goes, it is time to analyze your data.  Are there areas in your monthly expenses that can be reduced?  Like taking a public transportation instead of taking a cab?  Using prepaid cards instead of postpaid plans?  How about canceling your magazine subscription?  Or packing lunch instead of eating out?  Terminating some of your credit cards to avoid annual fee payments?  There are a lot of things that can be reduced.  Ask a family member or a friend to help you identify areas wherein you can cut cost.  Be open to suggestion.  

4.  SAVE MORE.  The usual goal of making a budget is to SAVE MONEY.  So when you finally reduced some of your expenses, be sure to save those extra money.  Set a goal on how much money you want to save like setting up an emergency fund of P50,000.00 or a medical fund of P30,000.00.

5.  REVIEW.  Review your budget every month.  When your financial situation change, so are your goals and needs.  So your budget will also change every month.

6.  START NOW.  What are you waiting for?  Start doing your budget right now.  Get a pen, paper and a calculator.

Related Posts by Categories