5 Steps on How To Budget

About Leon Williams

As a financial strategist and money coach, Leon is able to apply tried and tested systems and wealth strategies, which enable his students and clients to improve their financial and personal lives.

The typical perception of a budget is usually met with a scowl and a feeling of “doing without”. this perception and the feelings that come without could not be further misplaced.. In fact, a well crafted budget can allow you to be able to save for college, buy new cars, take great vacations, donate to charity, etc. Properly preparing a budget that actually works for you has perplexed even the most financially educated individuals. Here are 5 steps to get you on your way to a more fulfilling and prosperous life.

Step 1-Understand where your income comes from and where it goes

Looking at all of your sources of income such as overtime pay, garage sales, tax refunds, and how you can use them in your budget can easily  make your budgeting on paper a lot more doable. Unplanned expenses like repairs on your car, also fall into this category.

Step 2-Define Your Short And Long-term Budget Goals

For example, if you plan to buy a new stereo system and pay cash, do you have an entry in you budget that shows how much you plan to save each payday to make that happen?

Step 3-Devise Saving Mechanisms In Your Budget

For instance, if you plan to create an emergency savings account to cover such things as unexpected car repairs, have you opened a savings account for that purpose?

Step 4-Address The Need Of Spending Money For The Family

We all need some pocket money for everyday expenses and not acknowledging that just leads to a “blown out” budget. Put a line in your budget for each family member and determine how much each family member needs.

Step 5-Review you Budget Regularly

It’s important to compare actual sources of incoming income against your expenses. Look at whether your income and expenses were in line with what you forecast in your budget. If you find that you were over or under budget, ask yourself,  what happened and what is your plan of action?