The steps to follow in creating a budget

[Don Pedro Dinero]

Well, it's not bad, but the important thing about creating a budget to control your finances is to get started. At the beginning you won't have a perfect budget and you will see that as you make more monthly budgets you will include things you missed the month before. But over time you will have your expenses under control and then you will be able to save well. And to save better, when you have experience with your budget and you have been saving for a while, focus on earning more.

[1715412956]

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[crwth]

The easiest way for this IMO is to use a Money Manager or something. Where you would input different stuff like:

• Income
• Expense
• Assets

From there, you can organize the category and other important things. It's best to know where the money is going so that you can adjust accordingly and know how much you are really spending. This is to know if you are doing the right things or not to improve your life. It's a great time to start now.

[tabas]

Today, it is not important what people might think of you. Because what all matters now is how you deal with your own life and problem. Identifying it and creating budget for your expenses is a wise thing that everyone does now because of your habit is to spend mindlessly, you will have to deal with the consequences later on. That is why you will hear people telling that you should just spend according to your income abd that is living according to your means and living beyond your means. Living frugally as you follow all of those things mentioned by OP will even make you live better.

To properly plan a budget, it is necessary to divide expenses into fixed (payment for an apartment, transportation to work, interest on loans, communication services, etc.), variable (food, clothing, medicine), and optional (entertainment, cigarettes). It is also necessary to exclude purchases based on emotions. In the end, by analyzing your expenses, you can significantly reduce them

If you have trouble budgeting your money, what you must do is to eliminate the expenses that you do not need are just unnecessary vices because they will consume on your budget and then you might just regret it when it can be put into a good cause and expense. And if you are a compulsive buyer and that makes you spend unnecessarily, you need to seek help from the professionals because no one's gonna stop you until you have nothing left and you might do something more and crazy when you have nothing left anymore.

[Russlenat]

Marry Christmas and happy new year.
 It comes to me to share my knowledge with others, but I am sure some might know the steps in creating a budget, but it might be that they are not following it effectively. I hope if I share such knowledge, it will help a lot, especially in the season we are in now. I know that as we have already celebrated Christmas, we have spent much of our savings, which we are still going to spend more on when it comes to the New Year celebration, so I take this as a reason to share such information with others so others will not suffer, especially after all this celebration, so I will list and explain the steps in creating a budget.

Thank you for taking the time to come up with these wonderful budgeting tips. It is vital to measure your income with your expenses and see the outcome. If you can save some money no matter how small after paying for your expenses, you have a good budget. But if you have to borrow to finance some of your expenses, then you have to readjust your budget.

I am not moved by festivals or holidays like Christmas. I still ensure that I spend within my means. If I don't have extra funds to finance house decorations, new clothing, or travelling for vacation,  I will have to drop them from my budget because they are not basic needs. I have always told people that we have to enjoy Christmas based on what we have and we should never borrow because we want to celebrate Christmas in a big way more than what we can afford. We shouldn't lose sight that January comes with a whole lot of bills.

Well, if you have saved something big to make your Christmas and new year more festive, then there's no problem with that because you still live within your means. The important thing is you stick to your budget without crossing your financial budget plan. Spending during holidays is normal, what is not normal is to upgrade your expenses and take a loan just to make it happen. If your mindset is like this, you will never come to save or you will never be good enough once you enter such investments.

[puloweh555]

Well, it's not bad, but the important thing about creating a budget to control your finances is to get started. At the beginning you won't have a perfect budget and you will see that as you make more monthly budgets you will include things you missed the month before. But over time you will have your expenses under control and then you will be able to save well. And to save better, when you have experience with your budget and you have been saving for a while, focus on earning more.

I agree with you. Sometimes we read that the theory of making a budget is very easy, but when put into practice it is very difficult, and often fails. That's why many people succeed in making a budget correctly for the future because it's not just theory and practice, so they have experience in making the perfect budget.

This is an incident that happened to me several years ago, for some reason, since working in the capital, my income has indeed increased a lot, but the workload, risks, cost of living, needs, etc. have also increased. Correct. We must have additional work, at least we must be creative and have skills.

I used to be the type of person who was really extravagant, buying this and that and that, wanting a lot. to the point that I forget to save, in the end I don't know what will happen to me in the future. Since Corona, I realized that in the future there will be more expenses, I can save and set aside money, even if it's a little, the important thing is that we can manage our finances well, I saved to buy Bitcoin.

[Mr. Magkaisa]

         -   This is a well-done OP's topic about budgeting. Maybe the only thing I can add is that let's not forget that in doing the budget implementation, you must have a source of income and not just one as long as possible; your resources are more than that.

Because budgeting cannot be done correctly without them. And your source of income should also be stable, so that you can expand the implementation of this concept of budgeting because, in reality, many people don't manage this method properly, and let's not be like those people as much as possible.

[panganib999]

Marry Christmas and happy new year.
 It comes to me to share my knowledge with others, but I am sure some might know the steps in creating a budget, but it might be that they are not following it effectively. I hope if I share such knowledge, it will help a lot, especially in the season we are in now. I know that as we have already celebrated Christmas, we have spent much of our savings, which we are still going to spend more on when it comes to the New Year celebration, so I take this as a reason to share such information with others so others will not suffer, especially after all this celebration, so I will list and explain the steps in creating a budget.
 
The steps in the budget include

1. Determine your income: As the first step in creating a budget, you have to know your total income in terms of what you can afford. Do not write a budget that is more than your income and end up not achieving anything at the end because your income determines your budget, so let's take note of our income first. This income might include your weekly,monthly, or even yearly income, as well as side hustles and any other source of income.
 
2. Identify where your money is going: The second step in creating a budget is to track your expenses. This is also very important because, without knowing how you usually spend your money, you will end up writing a budget that you can’t even stick to. More over, expenses include housing, transportation, food, entertainment, gambling, and so on. When you have identified where your money is going, you can categorise it into groups. For instance, clothing, house rent fees, and others should all be in the category of housing. If that is done, you have definitely achieved your second step in creating a budget.
 
3. identify or set an achievable goal: This is the third step in creating a budget when you have identified your income, tracked your expenses, and categorised them. Why I say achievable goal is that you have to set a goal that you can achieve either long-term or short-term. For instance, you might save money in order to pay your debts, invest the money, or even pay for housing and any other expenses, such as buying valuable and usable items that won’t be a liability to you.
 
4. Start creating the budget or priorities for your expenses: This is the next step, for me. This is the step where you will start writing the budget. It is not that you won’t write those other steps I mentioned earlier; you will also write them, but this is the stage where you will allocate some amount of money to the categories that you have created at the second step, and you have to make sure that it aligns with your priorities. After allocating a certain amount of money to those categories, you should make sure that you keep some of it as emergency funds; it is also important.
 
5. Review the budget; in some cases, I mean monitoring, evaluation, or adjustment of the budget. This is like the final stage in creating a budget, although this stage is a continuous process because this stage never comes to an end unless you have purchased all that you have put in your budget to achieve this process, including regular adjustments as needed to accommodate and adjust your budget. This is done in case something comes up, such as the use of the emergency fund that you keep as a category for things like an increase in the price of what you intend to buy for medical expenses, which might be an emergency, and many others. In this step, you must track your budget very carefully and with caution to make sure you have achieved it.
 
The steps I have listed above are the ones I follow whenever I want to write a budget. You can change this step in many ways. For instance, a gambler can use it, but it will be more effective with the amount he needs for the gambling, and he should make sure he follows the track, so stick to the budget to avoid the source of unusual spending.
 

Useful post, I love that it's concise and that you are able to incorporate pretty much every important aspect of managing your finances, and the fact that it is inclusive, basically everyone regardless of if whether they indulge onto something or not is able to use this and is at the very least not hampered in any way whatsoever by having a budget, cause most people think when you set a budget you become even more stingy with your money, which shouldn't really be the case especially if all you want to do is to know where your money is going so you can spend it wisely.

One thing that I would love to add to this though is incorporating a savings portion from your budgeting. It's good enough that you know where your money goes and how wisely you can spend your money, it would be even greater if you can make sure that besides spending it wisely, you're also saving money for when the bad times roll. Set up emergency funds, or at least investment wallets depending on your capacities so that you'd have money you could depend upon when you need it the most.

[Davidvictorson]

Well, it's not bad, but the important thing about creating a budget to control your finances is to get started. At the beginning you won't have a perfect budget and you will see that as you make more monthly budgets you will include things you missed the month before. But over time you will have your expenses under control and then you will be able to save well. And to save better, when you have experience with your budget and you have been saving for a while, focus on earning more.

I would like to see some apps can help with this. I am of the opinion that if you write down your budget on a piece of paper, you take it more seriously than when it is on an app. With a paper budget or in a spreadsheet, you can easily see it without distraction but on a app, the ads and in-app purchases that comes with it will be too distracting. Also, it is easier to write a budget when you live in a country without a high inflation rate or one facing recession.

[franky1]

Well, it's not bad, but the important thing about creating a budget to control your finances is to get started. At the beginning you won't have a perfect budget and you will see that as you make more monthly budgets you will include things you missed the month before. But over time you will have your expenses under control and then you will be able to save well. And to save better, when you have experience with your budget and you have been saving for a while, focus on earning more.

I would like to see some apps can help with this. I am of the opinion that if you write down your budget on a piece of paper, you take it more seriously than when it is on an app. With a paper budget or in a spreadsheet, you can easily see it without distraction but on a app, the ads and in-app purchases that comes with it will be too distracting. Also, it is easier to write a budget when you live in a country without a high inflation rate or one facing recession.

most apps are set to certain limiting format, which dont work for everyone. your best bet is to make your own spreadsheet in your own design you are happy with. because most smartphones/devices can display spreadsheets. that way its fully custom to the way you prefer

like having separate spreadsheet tabs for food budget
budget [    ]    spent so far [    ]    left to spend [    ]
where the 'spent so far' is a total of another list on same tab you add/update during the month and then the spreadsheet deducts total spent against the budget to tell you whats left

then you can just copy and paste your template as 12 separate spreadsheets to edit per month

the good thing about spreadsheets is that you can set alot of custom formatting. EG if weekly budget is > 25% of month. make background red

[dothebeats]

I have built budget trackers for years, and one thing I love doing is overestimating how much my expenses will be so that I will be holding on to it religiously and not dare overspend. Whatever's left by the end of the month gets carried over to the next month or straight down to my savings. If my budget for the month is $3000, I make sure that I put in $2800 in there and just leave $200 'extra' that goes directly into savings. I try to envision the 'worst-case scenario' for my utilities and bills, and honestly that saves me a lot of money as it prevents me from spending extra money and thinking that I still have a lot to work with.

I would like to see some apps can help with this. I am of the opinion that if you write down your budget on a piece of paper, you take it more seriously than when it is on an app. With a paper budget or in a spreadsheet, you can easily see it without distraction but on a app, the ads and in-app purchases that comes with it will be too distracting. Also, it is easier to write a budget when you live in a country without a high inflation rate or one facing recession.

most apps are set to certain format  that dont work for everyone. your best bet is to make your own spreadsheet in your own design you are happy with. because most apps can display spreadsheets. that way its fully custom to the way you prefer

like having separate spreadsheet tabs for food budget
budget [    ]    spent so far [    ]    left to spend [    ]
where the 'spent so far' is a total of another list on same tab you add/update during the month and then the spreadsheet deducts total spent against the budget to tell you whats left

then you can just copy and paste your template as 12 separate spreadsheets to edit per month

I agree with this. I used online trackers and created notion templates or used mobile apps but it didn't do well for me. Spreadsheets, however, made me have a huge control over tracking and made me really dig deeper into how much I'm saving, and over time I added some more cool features to it like getting the percentage of how I spent month-on-month and see whether I'm saving more or saving less as the year progresses. It helps you get extra aware of how your money is flowing and where is it heading compared to apps that gives you pre-defined templates and cannot edit it based on what features you are thinking to add.

[uneng]

Also, it is easier to write a budget when you live in a country without a high inflation rate or one facing recession.

It's true, because your calculations will only have a real effect for longer when prices are more stable. On the other hand, when we live in countries doomed by uncontrolled inflation, prices of goods and services skyrocket in a daily basis, so we can't calculate efficiently our budgets. In situations like that, the last of the worries is to make a financial plan, especially a long term plan, because all the concerns are focused on the present moment, so people just take all the money they earn and immediately spend it on basic products, such as food, before the prices increase once again.

Unfortunatelly, this chaotic scenario limits very much the potential an individual has to thrive financially, as he is just unable to trace long term goals. He can't even concentrate himself on what the horizons may bring, because he is constantly putting out the fire to not die burned...

[wiss19]

Very good post and it can surely be useful for those who are finding it difficult to manage their money and honestly, it's a very common issue these days. A salaried person will always face issues managing their finances because they wait a whole month for the money and in that time, they are planning and delaying all the things that they need or want to do because they don't have money for it and when the money comes, they just start doing all the things that they have planned without creating a proper budget for the expenses.

The steps you've described should be used by such individuals so that they can plan and track their expenses in a good way and don't spend all their money in the initial days of the month and then become compelled to borrow money from others because they can't spend so many days without any money at all.

[Poker Player]

I would like to see some apps can help with this. I am of the opinion that if you write down your budget on a piece of paper, you take it more seriously than when it is on an app. With a paper budget or in a spreadsheet, you can easily see it without distraction but on a app, the ads and in-app purchases that comes with it will be too distracting. Also, it is easier to write a budget when you live in a country without a high inflation rate or one facing recession.

Apps? I personally use Excel, as I think most people do. The budget is best done sitting on your computer but if you are looking for apps to do it with your mobile, there are plenty. There are also some that track expenses if you pay with debit or credit cards but I use cash as much as I can, so I don't use them.

[EarnOnVictor]

Today, it is not important what people might think of you. Because what all matters now is how you deal with your own life and problem. Identifying it and creating budget for your expenses is a wise thing that everyone does now because of your habit is to spend mindlessly, you will have to deal with the consequences later on. That is why you will hear people telling that you should just spend according to your income abd that is living according to your means and living beyond your means. Living frugally as you follow all of those things mentioned by OP will even make you live better.

To properly plan a budget, it is necessary to divide expenses into fixed (payment for an apartment, transportation to work, interest on loans, communication services, etc.), variable (food, clothing, medicine), and optional (entertainment, cigarettes). It is also necessary to exclude purchases based on emotions. In the end, by analyzing your expenses, you can significantly reduce them

If you have trouble budgeting your money, what you must do is to eliminate the expenses that you do not need are just unnecessary vices because they will consume on your budget and then you might just regret it when it can be put into a good cause and expense. And if you are a compulsive buyer and that makes you spend unnecessarily, you need to seek help from the professionals because no one's gonna stop you until you have nothing left and you might do something more and crazy when you have nothing left anymore.

Having good plans and budgets is good, they are such ways that keep a person in check but the person must be ready to take responsibility and deny himself for this to be possible. This is of course for certain reasons which are mostly beneficial in the end. It may be for retirement savings, project execution, better living, vacation, property acquisition and many more. That is why the end must justify the reason that one is doing it, and this alone is a good reason for the person to make sure that it is done as planned. However, the major issue with budgeting is the availability of resources, if the resources are flowing very well, actualizing a budget is not an issue, but if the resources are scarce, it might be a tougher task than expected.

Regardless, if you plan it well, you achieve it well, and you must know that it is not going to be easy. You have to stop some frivolities and I do not believe in compulsive buying except if necessary. This doesn't still mean that the person must be strigent with it to the extent that it will be so negtive to the standard of living. But to a somewhat level that will make the person responsible, committed and accountable for the proposed goal to be possible painstakingly or not.

[tabas]

Having good plans and budgets is good, they are such ways that keep a person in check but the person must be ready to take responsibility and deny himself for this to be possible. This is of course for certain reasons which are mostly beneficial in the end. It may be for retirement savings, project execution, better living, vacation, property acquisition and many more. That is why the end must justify the reason that one is doing it, and this alone is a good reason for the person to make sure that it is done as planned. However, the major issue with budgeting is the availability of resources, if the resources are flowing very well, actualizing a budget is not an issue, but if the resources are scarce, it might be a tougher task than expected.

Denying is what you mean delayed gratification. All of those you've mentioned that someone wants to have at the same time as an achievement for his/herself is what we're all aiming for. IMHO, if you're able to do all of these things and you don't to sacrifice and your financial status is well and stable, you can enjoy it all the way. But if you have budget constraints, definitely that you should apply delayed gratification. It helped me a lot and I am still doing it until now, even if I want something and I can avail it rightaway, I am still thinking many times if I need it or not.

Regardless, if you plan it well, you achieve it well, and you must know that it is not going to be easy. You have to stop some frivolities and I do not believe in compulsive buying except if necessary. This doesn't still mean that the person must be strigent with it to the extent that it will be so negtive to the standard of living. But to a somewhat level that will make the person responsible, committed and accountable for the proposed goal to be possible painstakingly or not.

Yes, it is not easy but your experience and life struggles will teach you all the way naturally with all of these. You are working to live not living to work. And by that means, you save, invest and enjoy as long it's in line with your budget and lifestyle.

[icalical]

1. Determine your income: As the first step in creating a budget, you have to know your total income in terms of what you can afford.
 

The first point is only applied for people who has fixed salary/income, As a freelancer that doesn't have fixed income or salary for each month, what I do is fixing my spending. I dedicated certain amount of money for entertainment, lifestyle and anything that is not my basic needs, if not most of the time, this spending will be come uncontrollable.

[slapper]

You prioritize matching spending and income in your budgeting, which is detailed and practical. It's important to thoroughly evaluate your income, not simply its amount but also its consistency and dependability. A more flexible budget is needed for side gig income. Tracking spending requires classification and noting changing costs like seasonal utility bills and irregular expenses. Finding a balance between fixed requirements and variable pleasures keeps your budget sensible but flexible.

Setting feasible goals requires distinguishing wants from needs. This distinction helps prioritize expenditure and make better financial decisions. Emergency reserves are a good idea; they're a requirement in today's volatile market. As you said, evaluating your budget regularly is like a financial health checkup; it helps uncover overspending and allows timely modifications, keeping your goals on track and feasible.

[angrybirdy]

1. Determine your income: As the first step in creating a budget, you have to know your total income in terms of what you can afford.
 

The first point is only applied for people who has fixed salary/income, As a freelancer that doesn't have fixed income or salary for each month, what I do is fixing my spending. I dedicated certain amount of money for entertainment, lifestyle and anything that is not my basic needs, if not most of the time, this spending will be come uncontrollable.

Even if you are a freelancer and your monthly income is not stable, it is better that you have your own way of saving your money. In fact, freelancers earn even more, especially now that VA's work types are in demand. Just continue the method that you're doing so that you can get used to and practice well saving your income from freelancing.

[AnonBitCoiner]

1. Determine your income: As the first step in creating a budget, you have to know your total income in terms of what you can afford. Do not write a budget that is more than your income and end up not achieving anything at the end because your income determines your budget, so let's take note of our income first. This income might include your weekly,monthly, or even yearly income, as well as side hustles and any other source of income.

This is the first step towards success because if we spend whole income without realising that in which activities it has been used then we will not be able to save any amount even it will become difficult for us to fulfil our expenses in an accurate way.

Analysing your salary budget and then divide it according to your expenses in different percentage will help you to not spent your money in unnecessary things. One should not think that hard situation will tell him before arising therefore try to be ready for all the situations and save some amount in advance as you can feel need for it anytime.

[sokani]

2. Identify where your money is going: The second step in creating a budget is to track your expenses. This is also very important because, without knowing how you usually spend your money, you will end up writing a budget that you can’t even stick to. More over, expenses include housing, transportation, food, entertainment, gambling, and so on. When you have identified where your money is going, you can categorise it into groups. For instance, clothing, house rent fees, and others should all be in the category of housing. If that is done, you have definitely achieved your second step in creating a budget.

Having a budget and sticking to it, helps you to plan, prioritize, avoid overspending and to achieve your financial goal. Number two on the list is very important. When running a budget you should be able to tell where most of your expenses are heading to. For instance, If you discover that the operational cost of running a business is more than what you're getting out of it, then you've to decide whether you've to pull the plug and try something else.