Making a Budget (9/20/18)
This article was written by Dad Cunningham, Iowa
Learning to make a budget is one of the most important steps to becoming a financially responsible person. Without a budget, even a rudimentary one, you will be unable to keep track of your finances and will end up missing bills. Worst case, you are unable to pay rent or keep your car. Best case, you miss a couple payments and your credit score is affected. Making a budget is very easy and only requires a recent bank statement. In this article, I will break down step-by-step how to construct a budget.
First, you need to find your net income per month. This is how much money you take home every month. Write that number down, it’s important.
Second, track your spending. Establish what you need to spend money on every month. This includes things like your car, car insurance, rent, and other utilities. Write all these down and subtract them from your net income. With the leftover money, evaluate your spending on things you want, but don’t need.
Third, start saving. Savings are important. They can be an emergency fund and a way to save for bigger purchases. A good rule of thumb is to try to put at least 20% of your monthly income into savings.
Third, make a plan. If you are over spending every month, plan to cut the money you’re spending. For example, many people make the decision to make food at home and eat out less to save money. If there is something you want to save for, like a new car or a new computer, make a concrete plan to save for that.
Making a budget is an easy thing. Stick to your budget and your finances will look much better!