Creating a working budget provides valuable insight into household income and expenses. Effectively, they can tell us what money is going where and for what purpose, helping us identify areas of wasteful spending and discovering new ways to save.
Goals and Values
Setting your goals and deciding your values and finding the common connection between the two will help you set up a budget allowing you to reach your financial goals. Write a list of what matters and where you see yourself financially in 3-5 years. What would you like to accomplish financially in 3 months, the next year, in 3 years and in 5 years.
Income and Expenses
The next step would be finding out your income and expenses. The income should be determined on your available pay or net pay and in discovering your budgeted income do not include any tips, overtime or bonuses. In deciding your expenses, you want to look over your checkbook register, credit card statements, store receipts and more. Expenses would also include rent, car payments and insurance, an expense is paying for a service or product. Many budget apps and programs are user-friendly, giving you quick results.
Keep to what your budget will allow, see where your money is going to and look for opportunities to save.