hi this is tony from darlington academy and in this video we'll take a deep dive on the topic
of budgeting specifically making a budget for beginners why make a budget because a budget
is a plan that helps you manage your money and making a budget can help you a set spending limits
b find ways to pay down your debts c save for travel business and investing
d live within your means e reduce stress f have more money for things that are important to you
g feel in control of your money etc but before you start budgeting it's important to answer these key
questions one why would i need to budget is it important to me right now two what do i hope to
achieve in the future and where would i want to be then three where is my money going four
what are my needs and wants these are vital questions we'll be answering coming up next
the coven 19 pandemic gave most of us a rude awakening on the importance
of having a back-up plan in terms of emergencies this harsh reality further gave people a reason to
seek ways to make more money while that may be the goal understanding budgeting will help you lay a
stronger foundation budgeting helps you figure out how much money you get how much you spend
and how much you save making a budget can help you balance your income with your savings and expenses
it guides your spending to help you reach your financial goals now back to those questions one
why would you need to budget is it important to you right now a budget is especially important
if you a don't know where your money is going b don't save regularly c have problems paying off
your debts d feel overwhelmed by your finances e feel like you're not in control of your finances f
want to make the most of your money g are planning for a major purchase or a life event etc
two what do you hope to achieve in the future and where would you want to be then
think about your goals things like financial freedom being debt-free living healthier and
happier etc identify your short-term and long-term goals make saving for those goals part of your
budget for example short-term goals can be paying off your credit card reducing your weekly expenses
starting to build an emergency fund etc while long-term goals can be
paying off all your debts saving to buy a home a car or booking a trip saving to have children
to go to school or to retire saving to start a business or start an investment portfolio etc
on a side note when thinking about your short-term goals it's important to start
building an emergency fund your emergency fund should provide you with enough money to cover
your living expenses for three to six months these amounts can sometimes seem out of reach
that's why you should start by saving a small amount on a regular basis having an emergency
fund will help you reduce financial stress and avoid getting trapped in a debt cycle
three where is your money going tracking your money will help you figure out what comes in
and what goes out of your pocket every dollar you spend affects your overall budget for example if
you spend fifty dollars a day on dining out it will cost you more than eighteen thousand
dollars a year to keep track of where your money is going take note of what you spend for example
a keep track of everything you buy from groceries to a daily cup of coffee b keep a copy of bills
you pay during this period c try dividing your expenses into two categories needs and wants
small changes to spending habits can have a major impact on your budget and your ability to save
four what are your needs and wants knowing the difference between your needs and your
wants is key to making a smart budget a need is something that is necessary required or essential
for example a roof over your head clothing food or medication while a want is something you'd like
but don't necessarily need for example meals at a restaurant a trip a gym membership or designer
shoes needs and wants aren't the same for everyone one person's want may be another person's need
for example if you live near a bus route a car may be a want rather than a need however
if you don't have access to public transit and can't cycle to work you may need a car
your needs and wants may also change over time for example a large house may be in need while
you're raising a family however a condo or smaller home may be what you need when your
children move out once you've figured out your needs and wants you're ready to start your budget