How to make a personal budget
Money is an important part of our lives, enabling us to obtain products and services that make life easier for individuals, and some are sometimes exposed to an increase in expenses or expenses over revenues; Which is a burden for them, which ultimately leads them to resort to debts or loans, while others may have a curiosity to plan in the ideal way for everything related to money, and therefore we can explain how the personal budget works, which in turn contributes to solving these problems by Through the following steps:
Determine the expected monthly income
The first step in preparing a personal budget is to determine the amount of money that you earn each month. If you work in a fixed job, it may seem simple to you because it is easy for you to be able to anticipate your monthly salary, but some individuals may do freelance work, or work in two jobs. at the same time during the day, which may reduce accuracy in the process of calculating the monthly income he receives, and in these cases approximate figures must be put based on previous data that were studied on the ground.
In the second step, you must create a list in which you mention the fixed expenses or expenses that remain the same from one month to the next with the same value. This type of expenses may include:
Loans and financing.
Children’s education expenses.
Electricity and water bills.
Then write all these expenses in a specific place and turn them into a table whose data is easier to handle and more understandable.
Collect fixed expenses
You must add the expenses that you pay periodically to get the final value that you will pay at the end of each month, since the numbers will not change significantly from one month to another as they can be used as the basis for the monthly budget, then you must subtract your total fixed expenses from the expected monthly net income that you You selected it in the first step; Find out how much income you have left to pay for variable expenses or emergencies and savings.
Make a list of all variable expenses
At this stage, you need to create another list in which you write down all expenses that change from one month to another, as is the case with groceries, restaurants, shopping expenses, gifts, parties, picnics, or any other expenses and expenses, as their value can vary based on the need for them in Each month, and to help yourself come up with reasonable numbers, you can analyze the variable expenses you’ve paid in the past month, which will give you a good estimate of your spending habits.
Collect variable expenses
It lies in adding the total variable expenses to the total fixed expenses and then subtracting them from the expected basic net income each month, to show you at the end what is left of it to complete the spending during the month, and by reaching this stage we can reach the result of your spending volume compared to the net income If the total net income is greater than the total expenditures, then it can be said that the situation is still under control, and vice versa if the total expenditures are higher than the net income.
Sort your monthly expenses into categories
In this step, you must commit to dividing expenses into categories after studying the difference between fixed and variable expenses. Through this, basic categories and sub-items can also be used. For example, food can be placed as a basic category, and restaurants, groceries, etc. are included in the items or their sub-items.
Check and adjust financial goals
Preparing a personal budget is important for achieving a wide range of goals that belong to individuals, and accordingly, in the last step of preparing it, you must take the necessary measures that help ensure that the budget achieves the goals for which it was set, and in the event that the opposite appears, it is possible to take some Adjustments or changes to your spending habits.