How to have your own personal budget

Have you ever thought about having your own personal budget, so that you can organize yourself and live in a more balanced way?

Well, that’s what we’re calling your attention to. Follow us on this topic and take advantage of the many tips.

Most people live financially disorganized and even in debt.

This is due to a lack of order and planning, or financial education.

Organizing and having a personal budget is very interesting, and everyone can benefit from it.

What is a personal budget?

Talking about a budget seems a bit discouraging, as some people find that life becomes full of restrictions.

Others say it’s difficult to follow and takes a long time.

However, most people are certain that they need to change their financial habits.

The process of budgeting is revitalizing and really puts you in control of your money.

So, in order to have your own personal budget, you must, of course, want to change your life.

And it’s nothing more than organizing a spending and saving plan month by month, based on your income.

However, there are a few points that need to be identified, such as

• Setting goals and priorities;
• Keeping track of income and expenditure;
• Making adjustments if necessary;
• Creating a budget document, such as a spreadsheet.

Why have your own personal budget, and what is it for?

According to the Federal Reserve Bank of New York, US household debt is getting higher and higher.

It has risen from US$16 billion in the second quarter of 2023 to US$15.06 trillion.

These figures show the lack of control over finances and the urgent need to create awareness of moderate consumption.

It is therefore important to have a personal budget, which gives you total control over your money.

It reduces stress and increases self-confidence, making you dream bigger and with real possibilities of achievement.

This improves your ability to keep your bills up to date and not go negative during the month.

You’ll also feel more confident about facing any financial problems, such as unemployment.

Another benefit of having a personal budget is better preparation for the future.

If you have financial planning in place, you’ll be able to save and invest money so that you can make your dreams come true more quickly.

Plan your spending in advance

One way people get into debt is by not planning ahead before making purchases.

Or even for vacations, tax payments and much more, you need to be prepared throughout the year.

Consider putting aside an amount each month just for these things, so you don’t have to deal with the discomfort of running out of money.

That way, you’ll avoid having to take out a high-interest loan and pay for the rest of the year what could have been paid in cash.

In order to have your own personal budget, you need to be prudent and avoid wandering around stores when you go out to buy something.

Better still, make a list before you leave the house of everything you need.

Always put superfluous items, or those you don’t really need at the moment, at last.

Steps to getting financially organized

The first step to getting your personal budget organized is to see what your net income is.

In other words, this is your salary after taxes and programs provided by the company, such as health insurance and pensions, have been deducted.

It’s important to know your real income, and what your sources of income are, so you don’t get lost when it comes to spending.

On the other hand, if you are self-employed, work on a temporary basis or are a freelancer, keep a record of all your income.

Keep a record of all contracts and payments. This will help you identify your profits and expenses.

Once you know how much you earn, let’s move on to the second step; your personal budget.

So, find out where your money is going, if you’re not spending more than you earn.

You can almost always cut something and save a little on those superfluous items.

In this sense, list all your fixed expenses, which are the bills you can’t afford to not pay every month.

Such as mortgage or rent, car payments and utilities, among others.

In other words, try to keep track of your expenses and organize them into categories, which will help you see what you’re spending the most on.

In order to have a well-defined personal budget, also make a list of variable bills.

These are the ones that can usually change on a monthly basis, so don’t miss anything, everything is important.

Such as the supermarket, gasoline, entertainment, pharmacy, and others, these are items that give you the opportunity to cut back.

Always use whatever you have at hand to write down your expenses. With advanced technology, it could be your smartphone.

It could also be spreadsheets or some budget templates found on the internet.

The second step to having your own personal budget

After checking all these guidelines, first analyze your goals. What are they?

That’s right, set them in the long or short term, remembering that they drive you.

Short-term goals can take between one and three years to achieve, such as paying off debt or an emergency fund.

Long-term goals, on the other hand, can take decades, such as saving for your children’s education, retirement and so on.

Setting goals doesn’t mean sticking to the same objective; you can change them whenever you want.

However, don’t stop listing them. They will encourage you to fulfill the purpose of having your personal budget to control your finances.

Remember to set real goals that are in line with your income and that you can achieve.

In the fourth step, add up your fixed and variable expenses and identify your actual spending per month.

This will give you an idea of how much you will be spending in the coming months.

In this sense, compare your net profit with your expenses and think about setting limits.

Establish specific expenses that are logical in every class of expenditure.

This way, you’ll be able to divide the items you really need into those you really want.

To keep your personal budget organized, consider going to work by public transport instead of by car.

With the price of gas always rising, you’ll have to spend more at the end of the month.

Make a plan, and try to stick to it for a while, you’ll soon realize that you’ve made the right choice and are saving more.

Fifth step towards your personal budget

This step is challenging but necessary: adjust all your spending to stay within your budget.

In other words, once you are aware of your expenses and income, try to make some adjustments to spend less.

How about thinking about your desires? Instead of dining out, make a special dish and eat at home.

On the other hand, try to rationalize your monthly expenses. If you look closely, a habit may not be easy to give up.

However, in order to have a satisfactory personal budget, some cuts are necessary.

If you can’t stay on budget, consider adjusting your fixed expenses.

For example, look for more affordable home or car insurance, save water by collecting clothes to wash in one go.

Spending less time in the shower to save electricity. There are a multitude of cost-saving measures.

In this sense, the small details will make a big difference, and you will soon realize how much money you will save.

In the sixth stage of defining your personal budget, it’s worth constantly reviewing it.

That way, you’ll be sure you’re on the right track – a few things are unchangeable.

If you have a salary increase, or your spending is reduced by some change, there are several possibilities.

So don’t forget to check, and don’t leave your plan in the drawer, always have it handy.

Try to follow all the phases described above, and if you don’t reach your goal in the first month, don’t give up.

Remember that having a defined personal budget will allow you to better manage your money.

It will allow you to pay off your debts, achieve your goals, build up an emergency reserve and plan for a peaceful future.

Don’t neglect the emergency reserve

Not taking care of this resource can have negative consequences.

In other words, almost everyone will face difficulties one day, especially financial ones.

And not having a source of emergency funds can be very discouraging.

So, when it comes to organizing your personal budget, don’t overlook this solution.

If possible, set aside 10% of your monthly income for this. It will be your safe haven for unexpected expenses.

Don’t let this money sit idle, invest it in a safe financial investment – fixed-income investments are ideal.

That way, your money will keep earning, and you’ll be able to withdraw it whenever you need to.