18 May Creating Your Home Budget
If you wish to achieve financial success, you must create a personal budget. But a budget will do you no good unless you diligently use it as a guide in managing both your income and your expenditure. Creating a personal budget is not as difficult as some may think it is. However, for the budget to be truly useful, you must be thorough and realistic as you put the budget items together.
A budget is simply a financial planning tool that is intended to help you monitor and control your financial resources. The budget should cover a specific time period – usually a month. You may create a budget simply using pen and paper or you may use a simple spreadsheet program such as Microsoft Excel.
- The first thing to do is to make a note of all your sources of income. This should include your salary and all other income that you expect from investments, businesses, remittances etc.
- Write down each source of income and beside it, write down the dollar amount that you expect.
- Then tally all income sources to get total income.
- Next you should note all sources of expenditure and the respective dollar amounts. Be careful to income all foreseeable expenses and be sure to include amounts for savings and an amount for miscellaneous expenses. Miscellaneous will cover items that you may not foresee immediately.
- Tally all expenses.
- Finally, you should subtract your total expenses from your total income. Ideally you should end up with a positive figure. If not, do the exercise again, cutting expenses where possible until the budget becomes positive.
Now is the right time to create a personal budget. Once you do so and start following it, you are on your way towards financial success.