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Having money set aside is important, especially if you are planning on buying a home, building a family, or making a career change. While most people understand the importance of having an effective budget, many don’t have the necessary information to construct a solid budget or navigate their finances fluidly.

Furthermore, many people don’t keep a monthly budget. According to a survey conducted by the National Foundation For Credit Counseling, about 6 in 10 Americans do not maintain a budget.

Having a budget can help you manage your money and make achieving your goals easier.

A budget is typically the most basic tool for financial planning. It can take some time to learn how to make one work for you; however, once you understand the basics, it can provide you with solid financial footing.

By setting goals and living within your means, you can start to feel more confident about your financial situation. Below is a brief guide on making a budget for 2023.

  1. Determine Monthly Income

This step can be easy if your income doesn’t fluctuate monthly. If you’re self-employed, take the average of your last three to six months to determine what you can expect to earn in the future.

  1. Calculate Monthly Expenses

After looking at your expenses for the last month, divide them into different categories to better understand how you use your money. Some of these include rent, groceries, and medical expenses.

You should also add recurring expenses such as insurance premiums and annual membership fees. By dividing these expenses, you can easily determine how much they cost each month. Don’t forget to include your debt payments and savings goals!

  1. Create the Budget!

To create a monthly budget, subtract all of your expenses from the last month’s income. You can do this with a worksheet or online budget calculator. If the amount is negative, you’ll need to make some adjustments to your spending to ensure that you’re staying within your means.

If you have a little money left over, consider using it to pay down debt or put it toward savings.

  1. Keep Track of All Expenses

If you don’t keep track of all of your expenses, then creating a budget won’t be able to help you achieve your financial goals. To ensure you’re on track, add up all of your expenses at least once a week.

When calculating your budget, it’s important to consider whether or not you need to make changes. For instance, if you have a $400 grocery budget but already spent $300, you might have a problem with your spending.

Make the necessary adjustments to your spending to ensure you don’t exceed your budget. Doing so could mean taking money from a different category or reducing your savings.

The last thing you want to do when it comes to creating a budget is to start one and then stop after a couple of months. Finding the best one for you is the key to making a budget that will stick with you for a long time.

There are various types of budgeting methods that you can use. Although some of these require a lot of preparation and tracking, others focus on general spending trends. Before you start using a budget, consider meeting with a financial planner to help you make the most effective plan.