We talk a lot about budgets around here, but there’s a good reason for that: they are an essential financial planning tool that can help you get out of debt and save money.
The most effective budget is one that’s tailored specifically to your financial situation. So, before you create a budget, determine your cash flow and your net worth to get a better understanding of your current finances. You can use our cash flow analysis and net worth worksheet to calculate this information.
Ultimately, you’ll want to know exactly how much money you make in a certain period of time (monthly is usually ideal) and what your expenses are during that time frame (things like rent/mortgage payments, debt payments, utilities, groceries, etc.). Also, track your spending habits; basically, every penny earned and spent should be recorded. Once you have all this information, you can start designing a budget that’s right for you.
Mint offers similar advice in their infographic, “How to Create a Personal Budget.” For more information on how to create a budget, check out our budgeting articles or our budgeting guideline. We’re also happy to answer any questions you may have; feel free to leave a message below or contact us privately.