You must be wondering how some of the wealthiest people on the planet got their wealth. Well
the most important habit from them is to keep track of their finances and not only since
they became wealthy. They did it from the beginning.
Ask yourself, how are you going to improve something if you can't even measure it ?
We ourselves have created our budget exactly according to these steps and can now build
up our assets in a predictable and measurable way.
And In this video we show you everything you need to know to create a budget within 10
minutes and how to budget your money with it step by step.
Hi everyone, it's Finance nerds here! On this channel, we are helping hardworking people
like you to get more out of your hard-earned money by showing you how to use your money
in the most effective way”. So, what you have to do is to follow these simple steps
on how to make your budget in 10 minutes. “With that being said let’s get into the
steps” You must first determine what you are actually
spending, what you can afford to invest, and what your goals are in order to build a budget
that works for you and helps you to live a wealthy and happier life.
Here is Step 1: Make a note of your net income. Identifying the amount of money you have coming
in is the first step in making a budget. Keep in mind, though, that if you think of your
overall income as what you have to invest, it's easy to overestimate what you can afford.
Remember to leave out the Social Security, tax, 401(k), and flexible spending plan allocations
when creating a budget worksheet. Your net profits, or final take-home pay, is the sum
you will use to build a budget.
And a Tip for you: If you have a skill or a hobby, you may be able to supplement your
income. Having a secondary source of income can also come in handy if you lose your work.
Step 2: Keep track of your expenses. It's a good idea to keep track of and categorise
your expenses so you can see where you can cut back. This will help you figure out where
you spend the most money and where you can save the most money.
At the beginning, make a list of all of your fixed expenses. There are recurring bills
such as rent or mortgage payments, utility bills, or car payments. While it's doubtful
that you'll be able to eliminate these, knowing how much of your monthly income they consume
can be useful. Next, make a list of all your variable expenses,
such as groceries, petrol, and entertainment, which can fluctuate from month to month. This
is an environment where you would be able to save money. Credit cards and bank statements
are good places to start because they itemise and categorise your monthly expenses.
Here's another Tip: Keep track of your everyday spending using whatever you have on hand,
whether it's a pen and paper, an app, or your mobile phone.
Did you like how we explained these steps to budget your money so far and want more
of this, then like the video and show us your support.
Step 3: Create a list of your goals. Create a list of all the financial goals you
want to achieve in the short and long term before you start shifting through the data
you've collected. Short-term targets can be completed in less than a year. Long-term goals,
such as retirement savings or your child's education, will take years to achieve. Remember
that your objectives don't have to be set in stone, but determining your targets before
beginning to prepare a budget will assist you. For example, if you know your short-term
target is to pay off credit card debt, it will be easier to cut expenses.
Step 4: Make a strategy. Use the list of variable and fixed expenditures
to estimate how much you'll spend in the coming months. You should estimate how much money
you'll need to spend based on your fixed expenses. When attempting to forecast your variable
expenses, use your previous spending patterns as a reference.
You may further divide your expenditures into necessities and desires. If you drive to work
every day, for example, fuel is almost certainly a requirement. A monthly music subscription,
on the other hand, could be considered a want. When it comes to making changes, this distinction
is important. A Tip: Try to align your plans and strategies.
If you are using one pattern and it’s a failure then don’t use it again.
Step 5: Make the possible changes to your behavior.
Once you've completed all of this, you'll have everything you need to finish your budget.
You will start to see where you have money left over or where you can cut back so that
you have money to put into your goals so that you've tracked your income and expenses.
The first place to look for savings is on want-to-have expenses. Will you watch a movie
at home instead of going to the cinema? Change the numbers you've been tracking to see how
much money you can save. Review your spending on needs if you've already changed your spending
on wants. Of course you can have internet access at home, but do you need the fastest
connection available? Finally, if the numbers somehow don't add
up, consider changing the fixed expenses. It would be much more difficult and take more
discipline to do so, but a "need" might just be a "hard to part with" on closer inspection.
Such choices entail significant trade-offs, so carefully consider your options.
Another Tip for you: Small savings can add up to a significant sum of money, so don't
forget the details. You might be shocked by how much money you can save by making small
changes over time.
Step 6: Continue to check in. It's crucial to check your budget on a regular
basis to ensure that you're on target. You may also equate your monthly expenditures
to those of people who have similar spending habits as you. Few aspects of your budget
are set in stone: you might get a raise, your expenses might rise, or you might have met
your target and want to set another one. Whatever the cause, keep an eye on your budget.
Keeping track of your expenditures during the month can help you avoid overspending
and recognise excessive or problematic spending trends. Rather than waiting for the end of
the month to report your expenses, take a few minutes per day to do so. Keep track of
how much you've spent when you go through your budget. You'll need to either stop spending
in that category for the month or transfer money from another category to cover extra
expenditures once you've hit your spending cap in that category.
Your budget's target should be to keep your monthly expenditures equal to or less than
your monthly revenue. Situations shift. When we change jobs, relocate,
or have children, our priorities shift. Make it a point to sit down with your budget every
few months to make sure it's all working with your present expectations and realities.
It's simple to play around with your budget categories if you've already entered your
numbers into a programme or database to see where you can make more space or prioritise
one thing over another. Keep in mind that your budget should work
for you, not against you.
Now you know how to create a budget and if we could help you get your finances on the
right track, make sure to subscribe to our channel and hit the button.
And if you like to go deeper into budgeting your money checkout our description. You will
find our recommendations to “watch next” to get your finances to the next level.
We hope to see you in the next video!