Things that should be listed on a Budget
Income
Fund are the first and foremost step that need to be defined while making a budget and these are the income sources. This might sound a little silly for most and but a necessary initial step is the calculation of your total monthly income.
Real-Life Tip:
When I first started planning I thought of my income as just my pay check but it is so much more than that, it includes the side jobs and freelance work. Therefore ensure all your sources of income are captured- whether it is from a side hustle, rents, or even money from your parents or any relative. At the top of a blank table, specify your total, monthly income; this will be the starting point for your budget.
Fixed Expenses
Next up are what can be regarded as Fixed Cost—those costs that are relatively constant and do not fluctuate with frequency. This includes rent or mortgage, the utilities, insurance policies, and any interest payments and so on.
Real-Life Insight:
The first time I tried to list the fixed expenses made me realize how much money I had being wasted. It was eye-opening! That means more money was committed to different subscription services than I had anticipated. Recognizing these costs at the beginning allowed proposing on which subscriptions the cuts could beowntatted without a significant reduction in interest.
Variable Expenses
Variation costs come next among the regular expenses – they are all the costs that change month by month. Hunger is categorized as groceries and dining out, fun and entertainment, and personal care.
Engaging Anecdote:
To illustrate this, one month I set myself a goal of monitoring my expenses on eating out closely. What has really shocked me was realizing that I was spending about $200 on takeaways alone every month. By watching this variable expense creep up and become one of the major expenditures, I ensured to cook most meals at home and equally began preparing meals on Sunday at home. Besides, the process of cooking allowed me to save money, but doing it with different recipes gave me joy.
Savings Goals
Now that you have a grasp on your income and expenses, it’s time to think about your future: savings goals! Regardless of whether you are saving for rainy days, for a holiday or for your retirement, having a savings’ portion is paramount.
Personal Experience:
In the initial period of budget planning I was not as much conscious about saving as the planning demanded. That is, until I started leveraging this money like it was on par with rent – I saw a massive shift in my financial standing. Transferring money to my savings account on auto pilot help achieve these goals without actually planning on it.
Debt Repayment
Last but not least, in case you have any outstanding loans you are still paying – credit card balances or student loans – these should not be left out in your budgeting process. Staying organized is important especially when you have unpaid debts as it enable you to come up with a schedule to clear the debts and at the same time you do not find yourself in more debt.
Reflective Moment:
What I remember very clearly is the day when I decided that I am going to meet my student loans man to man. When I gave details of each debt including interest rate and a minimum payment, the record was used strategically. This clarity not only motivated but also enabled me to follow the right strategy of eradicating high interest debts first.
Conclusion
So, there is actually no need for big fuss, to make a budget, here and now. Starting with these five elements of a budget —income, fixed expenses, variable expenses, savings objectives and paying of debts —will give you a sound platform for your financial life. Remember, budgeting is never a one-size-fits-all thing, and would require changes from time to time.
And now that you embark on this budgeting adventure remember that it is all in the discovery of what best suits your type. Happy budgeting!