Creating a monthly budget may seem overwhelming at first, but it is an essential financial skill for managing your personal finances.
A monthly budget helps you get a clear picture of your income and expenses, and allows you to plan ahead to reach your long-term financial goals.
From setting your financial goals to tracking your expenses, we're here to help you take control of your money.
Analyze your income
Before you start making a monthly budget, it's important to analyze your income - that is, all the money coming into your household.
This includes your salary, extra income such as bonuses or commissions, as well as any other type of income.
To get an accurate picture of your income, it is advisable to make a detailed list of all sources of income and add them up.
If you receive income irregularly, you can average it out and use that number for your monthly budget.
Identify all your income sources
To create a complete monthly budget, it is important that you identify all of your income sources. This includes:
- Your regular salary;
- Additional income, such as temporary or freelance work;
- Investment or rental income.
By knowing all your sources of income, you will have a clearer picture of how much money you are earning each month and how to allocate it properly in your budget.
Analyze your expenses
After recording your income, it is important to analyze your expenses. This will allow you to identify the expense categories where you are spending the most and where you can cut back.
To analyze your expenses, you can break them down into categories, such as food, transportation, housing, entertainment, etc.
Then, review your receipts and bank statements to see how much you spent in each category during the month.
You may find that you are spending more than you thought you would in certain categories.
Once you identify areas where you can reduce spending, you'll be one step closer to creating an effective monthly budget.
Create a list of all your monthly expenses
The first thing you should do to create a monthly budget is to identify all of your monthly expenses.
Here are some tips to help you:
- Review your bank statements: review your bank and credit card statements from the previous month to see what you spent money on;
- Consider annual or semi-annual payments: if you have expenses that you only pay once a year or every six months, divide them by 12 or 6, respectively;
- Include variable expenses: Don't forget variable expenses such as entertainment, impulse purchases or eating out;
- Use a tool: There are many online tools that can help you track your monthly expenses. Just find the one that works best for you.
Categorize your expenses into basics and non-basics
Before you start To prepare your monthly budget, you need to know your expenses.
To do this, it is important to differentiate between basic and non-basic expenses.
Basic expenses are those that are necessary to cover the basic necessities of life, such as food, lodging, transportation, etc.
Generally, these expenses represent an important part of your monthly budget.
Calculate your total monthly expenses
To create a solid monthly budget, it is important to know how much you spend each month. To do this, you can follow these steps:
- Make a list of all your monthly expenses. Include everything from utility bills;
bills and rent to food and entertainment expenses; - Assign an amount to each expense. If you're not sure how much you spend in certain categories, check your bank statements and receipts;
- Add up the expenses to get your monthly total.
Calculate your net balance
The net balance is the difference between your income and your expenses. To calculate it, subtract the sum of your total expenses from the sum of your total income.
If your net balance is positive, it means you are earning more than you are spending, which is a good sign.
You can use that surplus to save or pay off outstanding debts.
If your net balance is negative, it means you are spending more than you are earning, which can be a concern.
Adjust your budget if necessary
Once you've created your monthly budget, it's time to evaluate whether it fits your needs and possibilities.
If, when reviewing it, you realize that there are expenses you hadn't considered or that some of them are higher than you expected, don't be afraid to adjust it.
You may be able to switch to a less expensive brand on some products or renegotiate your phone or internet plans to get a better price.
Look for ways to reduce non-essential expenses
Once you've identified your essential expenses, it's time to look for ways to reduce non-essential expenses. Some ideas may include:
- Cutting subscriptions and memberships you're not using;
- Buy generic brands instead of name brands;
- Reducing energy and water consumption in your home;
- Cooking more at home instead of eating out;
- Plan large purchases ahead of time to take advantage of deals and discounts.
Consider increasing your income with an additional job
If you need to increase your monthly income to achieve your financial goals, consider getting an additional job that will allow you to earn more money.
There are many options to earn extra money, such as selling products online, offering translation or language teaching services, gardening or cleaning jobs, among others.
Remember that it is important that the additional work does not affect your performance in your main job and that you take into account the costs associated with the secondary activity.
