A Step-by-Step Guide for Creating and Maintaining a Personal Budget

Budgeting, often times, appears very daunting, but is it really that difficult to do?

A lot of people think that budgeting is a way of being economical with means, but that is actually not true, at least not in its entirety.

So, what is a budget and how do you create one?

According to the Oxford Dictionary, a budget is an estimate of income and expenditure for a set period of time. 

That is, a budget lists an income and then expenditures. Something like this:

If you are using a pen and paper, this is how it should look, but of course you can download our budget worksheet to ease the stress for you.

You need to understand how much you earn and know what you spend daily, weekly, or monthly. What do you buy often? These will make up your budget. 

Whatever budget you are making, don’t forget the 50/30/20 rule.

The 50/30/20 rule is a budgeting technique that divides your take-home income into three categories by percentages. It’s a simple way to track your spending. Needs get the bulk of the money (50%), Wants get (30%) and the remaining (20%) goes to your savings.

Here’s the breakdown:

Needs: 50%

Rent or mortgage
Car payment or transportation
Utilities
Groceries

Wants: 30%

Subscriptions (TV, streaming etc)
Shopping
Vacations

Savings or Debt: 20%

Emergency fund
Retirement
Child’s education
Credit card payments

When you apply this 50/30/20 rule, you realize that you have more control over your income, your expenses and, more importantly, how well you save.

To assist you in making this seemingly daunting task surmountable, we have created a worksheet  to get your budgeting right. You can download it here.