No Budget? No Problem.

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Five Easy Steps to Create a Budget

There are a million things you’d probably rather do than make a budget for yourself. But it’s a lot easier than you think. Get started and learn how to create a budget with these 5 easy steps.

No Budget, No Problem

Do you have a budget? If the answer is no, you’re not alone. According to a US Bank study, only 41% of Americans use a budget to plan and track their spending. But making a budget is easier than you might think, and it can be a great tool that can help you set and work towards your financial goals.

Basically, a budget helps you plan how much money you’ll spend and save each month. It also gives you a snapshot of how much money you actually spend each month. Budgeting your finances also gives you a snapshot of how much money you actually spend each month, which may surprise you.

You can find easy-to-use (ex. budget worksheet from Kiplinger.com) use an app or online budget calculator to create your budget.

1. Write down your goals.

Before you start creating a budget, write down your short- and long-term financial goals:

2. Figure out how much money you make each month after taxes.

List all your regular sources of income, for example:

Your take-home pay usually is the amount you make minus taxes and any deductions like health insurance, union dues, or money you have deposited into flexible savings accounts, pension accounts, and other retirement accounts.

3. Add up how much you spend on regular expenses.

Now, it’s time to figure out how much money you regularly spend on average. Regular expenses are the things you have to pay for every month, which can include:

4. Subtract what you spend from what you make.

Now take the amount that you spend, and subtract that from your income amount. The amount of money that’s left is what you have to spend on other things like entertainment, clothing, and savings. You may want to use some of this money to pay down debts like credit card balances, or to pay more than the minimum installment on loans to pay the loan off faster and reduce interest on payments.

5. Look for ways to cut spending.

If the amount is less than zero after you subtract what you spend from what you make, you’re spending more than you’re making each month. Consider getting a second, part-time job to improve your financial position. Other ways to improve your finances and save money can be:

Even if you’re not spending more than you’re making, try cutting some non-essential expenses and use the money to grow your savings or pay down debt.

These 5 simple steps for creating a budget should help you better understand your finances and plan for the future.  After creating a budget, revisit it in a few months to see if your numbers were accurate or if you need to make changes. And remember to review your budget each year to make sure it still fits your financial situation. Of course, personal loans can also help when unexpected expenses arise that you didn’t budget for. Personal loans can help cover things like new furniture, travel expenses, updated appliances, car repairs, and more!


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