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.
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.
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.
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.