Ah yes, the dreaded budget. For many people, they think budgeting is too complicated or restrictive to their lifestyle when in reality, it's just a way to make sure your money go towards what is most important to you.
Before beginning your financial plan (see, not so scary), track your expenses for a month to get a sample size of your spending habits. Keep track of everything and record it, either on paper or on your mobile device. The little things you spend money on will differ from month to month, but this is a great foundation with your larger expenses. It’s important to be as accurate and honest here as possible, it isn’t going to help you to fudge the numbers on a personal budget.
After completing this, figure out your monthly income. Include bonuses, commissions, or other incentives you may receive throughout the month. Now compare your income with your expenses. The obvious goal is for your income to be greater than your expenses at the end of the month.
Now, take the expenses list and fill out a budget sheet, writing down what you will allocate for each expense. At the end of the month, add up what you actually spent and compare.
Although the goal of a budget is to keep track of what you’re spending and see where you could possibly cut back a little, that doesn’t mean you have to cut all the fun out of your life. In fact, a budget with no room for entertainment, like going out to eat, seeing a movie, or having a hobby, is more likely to fail. Like a lot of things in life, balance is key.
Most importantly, don’t try to complete all of your financial goals at once. It may take several tries over the span of a few months to find a planning method that works for you. Your life is bound to change over time, so it’s okay if your goals change too.