How to Budget Money 101 (You Know You Need To)

Budgeting is a financial exercise highlighting your earning, spending, and saving habits. It provides you with an overview of exactly how much money you’re making, how much money you’re spending, and how much money you’re saving over a specific period of time.

The good news is that creating a budget isn’t the hard part; sticking to it is where most people fall short. We’ll quickly spend the next few minutes going over the main parts of how to budget money so that you feel like you can finally do this.

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!

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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