5 Right Steps to Create a Budget

Step 1: Write down your total amount of take-home income

Include all sources of income for your household; such as: Job(s), side hustles, social security, unemployment, child support, alimony, etc.

Step 2: Make a list of all your expenses

List out everything that you spend money on throughout the month. The best way to do this is to review all of your receipts, bank statements, and credit card statements for the last 1-3 months to get an accurate picture of how you spend your money.

Step 3: Put these expenses into categories

Organize all of your expenses into categories to make it easier to manage. For example: Combine all of your food purchases into one food category, your utility bills can be combined into a utility category, etc. See the free budget worksheet for ideas.

Step 4: Create the plan

Use this budget worksheet to create a plan. Start by putting your total income from Step 1 at the top. Then list out the categories and their total amounts from steps 2 & 3. Then subtract the total expense from your total income. The goal is for the amount to equal $0, which means that you have a plan for every dollar, including savings!

Step 5: Commit & Track

The budget you have created is useless if you do not commit to using it and using it wisely. To do that, you must track your expenses each month to ensure that you are staying within your category limits. Nobody creates the perfect budget on the first try, so be prepared to return to step 4 and make adjustments after the first few tries.

 4 Right Steps to Save Money

Step 1: Create a budget

Create a plan for your money so that you can intentionally save without worrying about bills.

Step 2: Lower expenses

The less money you spend every month means the more money you have to save. Cut back on unnecessary expenses like eating out, cable TV, or shopping. Find creative ways to lower your bills or pay off debt.

Step 3: Increase your income

Extra income means extra savings; work a second job, find a side-hustle, earn a promotion, adjust your paycheck withholdings, or even sell things you own.

Step 4: Create an Emergency Savings Account

One of the biggest obstacles to saving money is when a financial emergency arises that depletes all of your hard-earned savings. Emergencies happen, so the best way to fight this is to plan ahead for them. Use steps 1-3 to create a special emergency savings with at least $1,000 to cover all those unplanned emergency expenses.

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