Lesson One
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Lesson One
We all have different levels of income and different situations to match. However, it does not mater how much money you make if you cannot learn to use what you have available. It is easy to get credit and often we start to live beyond what we can afford; this creates unnecessary debt and financial strain that could have been avoided.
A budget is a tool that helps you determine how much you make and what you spend your money on each month. Therefore, you can figure out what you can afford and what might need to be trimmed down to avoid going over your actual monthly income.
Before you start setting up your budget, there are a few things you need to gather to determine all aspects needed within your budget. The main aim is to determine the total you earn and against that takeaway all expenses to ensure you remain within the money available each month.
How much money you make in a month is essential to realising the total funds you have to use within a month. This can include : Fixed salaries, wages, Side hustles and any other income stream that you receive within a monthly basis.
You need to have a real idea of where your money goes each month for a budget to actually work. This means putting down every single expense you have within a month, even if you need to estimate the totals each month to account for it. This will include your debit orders, monthly payments made, allocations for all living expenses and setting values for certain items such as clothing, entertainment, food, etc. The best place to determine all of these items is by referring to your previous bank statements to see how much you spend each month and on what.
If you have never done a budget before, you won’t have a true understanding on where your money goes each month. That is ok, as you are now starting to put a budget together which is already progress – So good for you!!!
But as it is your first time, it will take some flexibility and sacrifice to make the budget work for you. Once you have determined your maximum funds available, you will need to adjust certain expense items that are not essential until it all fits in to your affordability.
Is purchasing clothes an Expense?
