Budget planning step 1: Your income
Using a spreadsheet list all of your sources of income. Work this out over a weekly, monthly and annual basis.
This will show you where there are any ups and downs in your income. Plus the more accurate this is, the better your budget
Income could include wages after tax, dividends and any other forms of income you have.
Budget planning step 2: Expenditure
Also using a spreadsheet, note down absolutely everything you spend money on. This includes all your bills, loan repayments, bond repayments, grocery shopping, takeaway coffees, swimming lessons for the kids, etc.
Anything you spend money on needs to appear here.
Make sure you include birthdays and other times of the years like holidays when you’ll spend more money.
Compare this to your income and see where you have shortfalls.
Budget planning step 3: Check your expenditure
For a month, keep a note of all your expenditure and reconcile your spending at the end of it. See where you could cut spending.
For instance, you may not have realised how much you spend on lunches or on things you don’t really need at the shops. It’s time to cut down on these.
Budget planning step 4: Work out your budget
Take your expenditure away from your income. See what’s left. This is the money you have to put to work for financial goals, investments and retirement.
You need to maximise this amount. You can do this by cutting costs and increasing your income.
So there you have it. How to put together a budget.
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