How to make a budget


One of the best moves to make when the economic situation becomes uncertain is to get your personal finances in order. And the only way to make that happen is to determine where your money is going and then develop a plan for spending that is optimal for your current situation. That’s where the budget comes in to play, it’s the roadmap to how you want your month to go financially. There are a few key steps to building a good budget.
Determine your expenses
The best method to determine your expenses is to look back at your spending for the last 90 days or more to get an average of what you spend. This will help you set goals for your spending that will be more accurate which is important when developing your budget. It is also important to look at non-monthly expenses such as insurance or auto licenses. As you work on this review, start considering ways to lower some of those expenses if you looking to improve your financial situation.
Income to use
The best way to build a budget is to use your net monthly income and also include any other income that you might receive. Don’t include any overtime, bonuses or other non-regular income. For those in sales positions it might be best to use an average of your net monthly income by looking back at your last 6 months of net take home pay.
Making it work
After you have built your plan, the next step is to put it into action. Using a tool of your choice and a budgeting method that works for you, you can start tracking your spending. It is important to remember that your goal is to not necessarily have each category at your goal but that your overall budget to balance each month. The power of tracking your expenses is that if one category is over you can adjust another category to make your budget work each month.
Handling the unexpected
Your budget is the tool that will help you make important decisions if there are any unexpected changes to your financial situation. If you are concerned about an impending financial situation then the budget can help look for places to reduce your spending and build your savings. Also it will help you prioritize your spending if your situation worsens.
Financially prepared
Being financially prepared is always a moving target and your budget is the one tool that can help you make adjustments as needed to be prepared as you can be for any situation. Start now building your budget with an understanding that you will make adjustments continually during good time and challenging times.

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