How to make a budget? On your way to financial success it’s important to know ‘How to make a budget’. In your budget you state your monthly expected income and expenses.
You are here and you want to go there. That’s your way to your financial success. The first step to financial success is to take a good, truthful look at where you are now. Do you know your current numbers as your income, your expenses, your assets and your liabilities?
Ask yourself the following questions:
- How much money do you earn monthly. This is the total amount of money that is coming in your household every month.
- What are your spending every month? Be brutally honest with yourself.
- Who do you owe money on today?
- What are your investments that you have today (stocks, bonds, business investments, real estate, gold, silver)?
If you do not know the answers to these question find out the answers. Have the courage to get the information you need to start taking control of your financial situation.
Make your budget as specific as possible
If you are an employee you have earned income which is fixed. As a self-employer or business owner you have a working income. Budget your working income based on the expected project times the average sales price per project.
Your passive income streams are also variable amounts. You can calculate the passive income streams based on the details of your investments. Before the investment you did a research with the detail of the investments.
Make your budget as specific as possible. An accurate budget will give you better insight, which is also the basis to make better financial decisions.
If you are an employee your vacation allowance is calculated as 8% of your yearly income. Your bonus is based on the conditions as stated in your contract.
If there is an income item that you do not know and you cannot calculate it, use the amount of that particular income category of prior month as the budgeted amount for this month. State all the expense categories with the budgeted amounts.
At the end of the month you can state the actual amounts and analyze the differences between the budgeted and the actual amounts. Analyze and understand significant differences between the budgeted and the actual amounts.
For your financial success!