How to make a personal monthly budget

Making a personal budget is an important point if you want to improve your financial situation and save more money at the same time because building a budget can help you control every single dollar of your money.

So, you should consider creating an appropriate personal budget to manage your money and avoid spending money on worthless things.

In this article, we are going to share with you 6 important steps to help you build a successful personal monthly budget.

1. Determine your Income

You should determine your monthly income before building a budget, and not the reverse.

Because you need to spend your money depending on your current income to make a balance between your salary and expenses.

So, the first step to building a personal budget is to calculate all your income resources. If you work for a company, you should calculate your net salary. And If you have a business, you can allocate a partial amount of your monthly income. Also, if you have a yearly income, you should divide it into monthly amounts as you will make a budget depending on the months.

2. Calculate your monthly expenses

The second major factor to consider when you want to create a personal budget is to calculate your monthly expenses. In this way, you will know the main things which consume most of your money and how to deal with them to reduce unwanted spending.

Therefore, start making a list of your expenses in the last month and know the approximate money you’ve spent, for example:

House rent

Utility Bills

Groceries

Transportation

Car Insurance

Monthly subscriptions

Others

3. Make a list of your monthly needs

After you know your monthly expenses depending on the previous month, it is time to know HOW to build the actual monthly list that can save your money.

The first thing you need is to make a list of the essential things that you need every month. For example, you must pay house rent every month and you can’t skip it. So, it is one of your monthly needs.

Note: if your monthly essential expenses are more than your income, you should think about improving your income first to make a balance between your income and expenses.

After you determined all your needs, you should make a plan for your savings and some entertainment activities such as going to the cinema or spending weekends with friends.

4. Set goals

If you want to get anything in your life, you should have goals because they can give you motivational power and help you to assess the results. Therefore, if you want to make a successful personal budget, you should determine the goals behind that.

The main goal of having a budget is to control your expenses and save more money at the same time.

There are two types of goals you should set when you create a personal budget.

1. Short-term goals: these goals are the small steps. And, they are the results that you need to achieve by the end of every month. For example, I should save $1000 this month and reduce my personal expenses to $800. This type of goals can be accomplished after a week, two weeks, and a month.

2. Long-term goals: the second type of goals and the most important are the long-term goals. This type can be achieved after a year, two years, and five years. These goals are the big results of your budget plan. For example, you saved $40,000 of your money in two years and you want to buy a car.

Having goals is the only way to create a perfect personal budget and monitor the results to save your money and time at the same time.

5. Create a plan to manage your money

It is not enough to make a list of your needs and set goals for your wants. You should have an actual plan of your budget.

There are too many ways to make a plan but the easiest way is to make a table in the Microsoft Excel program to manage all your money movements such as expenses, needs, savings, emergencies…etc.

In this way, you will have the chance to revise yourself every day and check your budget and assess the results.

6. Keep developing your plan

There is no constant plan of a perfect personal budget because it can be very different from one person to another as every one of us has different income and monthly requirements.

So, you should always develop your budget plan to get better results. Also, you should do that to be flexible with the circumstances. For example, getting a better job can help save more money and increase your wants at the same time.

On the other hand, the main reason for making a budget is to control your money correctly. So, if you noticed that you spend extra money on some worthless things, you should make a strategy to avoid wasting money.

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