How to Start a Budget
To start a budget, you need several resources, first, you need dedication. Second, you need a way to track your income and expenses. Simply put, a budget is the way to track where your money is going.
One way to begin a budget is to track your expenses and income by using a spreadsheet program, such as Microsoft Excel, or a free program such as Open Office. The easiest and most efficient way to track your expenses is a commercial budgeting program. (More information at the bottom).
If you choose to to use your own spreadsheet, plan to spend at least several hours setting it up, and about an hour a week maintaining it. Here are the steps in starting your budget:
1. Record all your income as you receive it. Be sure to record any money that comes your way.
2. Next separate all your expenses into categories, such as Mortgage, Utilities, Food, Clothing, Taxes, Auto expenses, etc. Everything you can think of.
3. Record everything you spend. Whether if it's a new 1,000 TV or a cup of coffee. Keep all your receipts. Categorize all expense under their respective categories.
4. Add up your total expenses and subtract that amount from your total income.
5. If your numbers are in the negative, you need to change your spending habits. It is imperative that your income never exceeds your expenses. Watch out on how you spend your money. Reduce as many expenses as possible to keep your income higher than your cost of living.
Be diligent in updating your budget every week. Be sure to make time to do so. You will soon be on your way to true financial freedom!
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