Navigating Financial Waters, Empowering Your Decisions.

Budgeting and Savings

What is a budget? Here’s how to start one

A budget is an estimation of expenses and revenue over a specific period in the future is called a Budget. A budget can be recalculated periodically. It can be made for anything like a budget can be made for a single person, a family, a company, an organization, a business and even a government. It can be made for anything that makes money and spends it.

A budget is a financial plan for mostly 1 year. It greatly affects and increases the success rate of any task. Every financial plan starts with a budget, from paying bills to planning a vacation first step is to make a budget to turn your goal into reality.

The following is how you can make a budget suitable to you.

Calculate your Expenses:

The first step in calculating a budget is to find out how much you spend each month. You can do this by calculating averages of expenses for the last 6 months. You can check your bank statements for accurate spending statements. Once you’ve calculated your budget add an extra amount for unplanned events like attending a wedding, car repairs, house repairs, etc. A good rule is to add an extra 10-15 percent.

Calculate how much money you make:

Its time to calculate your income after you have found out your average expenses. Note your actual salary and apart from that add extra funds you might get like cash gifts, selling of items, child support, rental income (if any) to get an accurate figure of your income.

Make savings and pay off debt:

When you have found out your income and your expenses. You need to check if you are in a shortfall or not.

Subtract your expenses from your income, if the result determines that you make more money than your expenses, that is good and you can pay your debts or save money off that extra money.

If your expenses are more than your income, it is time to decrease that gap. You can do this by cutting off expenses or by increasing your income. Record your expenses for a month, note down the items that are not necessary for you. Place the “needs” on one side and the “wants” on another side to help you triage what to keep and what to remove. Cut down these things until your budget is back to the positive side. Cut enough expenses that about 10 to 15% of income is left to be saved or to pay off debts.

Record the progress:

Keep yourself updated about the progress you are making. This is the best way to stay on top of your budget plan. Record all your expenses, incomes, savings, debts.

This can help stop you from spending money on unnecessary stuff and make you think twice before spending money. Keeping you motivated to continue until your goal is reached. You can also increase your savings over time and plan a new budget annually.

Set realistic goals:

Set your budget for goals that you know are achievable. Your goal must not be way out of your reach because most people get discouraged and give up when they realize the goal is out of reach. Set goals that are in your grasp and you can achieve easily by saving. Stick to your budget and you are bound to reach the goal you set. Sometimes it is okay to break the budget but it is important to get back on the budget as soon as possible.


Your email address will not be published. Required fields are marked *

Dr. Paul Etienne is a financial and business consultant in Orlando, FL. Paul holds a Bachelor of Science degree, an MBA and a Doctorate in Business Administration with a concentration in Finance. He has worked for large, well-known financial firms throughout his career. Paul and his wife Vanessa share their home inCentral Florida with one extraordinary daughter named Delaney and a wonderful son named Vansley. Paul brings his longstanding experience and vast knowledge of the financial sector to his audience through his book, podcast, training courses and blogs, in which he aims to help as many people as possible with a wide variety of financial advice. He also blogs regularly on www.madbu.comon subjects ranging from personal finance, debt, budgeting, real estate investing, mortgages and retirement and more. In his free time, Paul likes to play the guitar and code, investing in real estate and helping others to become more aware of their finances. He is a lifelong student of all things and is always learning about new ideas.The future, as far as Dr. Paul is concerned, will see him helping more and more people to learn about managing their personal finance and assets, so that they can remain financially secure with the help oh his book and his budgeting app MadbuMax.