A Guide To Budgeting Money And Improving Money Habits

Budgeting. The nine-letter word in personal finance either excites you or conjures up images of torture. Regardless of whether you’re excited, terrified, or lost somewhere in between, there’s something we can all agree on here.

It’s that budgeting exists for one simple reason—because it works. But exactly How to Budget Money so you can reach your financial goals and enjoy life?

Totalling your income

While there’s no particular order for how to budget money, per se, this really comes down to personal preference. For me, personally, the first step has always been calculating my total income before even worrying about my expenses.

Totalling your expense

One of the most overlooked outcomes here is not that totaling your expenses indicates just how much you’re spending, but that it provides actionable insight to help you understand how and where you should be allocating your hard-earned money.

Let’s calculate!

And now… it’s time we’ve all been waiting for! It’s time for you to actually “calculate” your budget. Again, the calculation is quite simple. By minus your total expenses (calculated above in step 2) from your total income (calculated above in step 2), you’ll arrive at a number that’s either in green or red, so to speak.

Based on the numbers above and whether you’re in the green or red, you’ll be able to create a spending plan according to your priorities.

Create your spending plan 

Now that you’ve got the know-how when it comes to budgeting your money, it’s time to put the above to good use to reign in on your spending habits.

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