5 Steps to Creating Your Own Personal Budget

Creating your own personal budget is a major step towards financial success.

Before we get into specifics, let’s review some simple definitions:

values – noun, plural: things or qualities that you desire.

goals – noun, plural: the completion of planned effort.

income – noun: a monetary gain or benefit that comes from doing work or an increase in capital.

expenses — noun, plural: a financial burden or outlay, a cost, or money that you pay out.

budget — noun: an estimate of income and expenses for a set period of time.

1. Make a list of your values. Write down what matters to you and then put your values in order of importance to you, starting with most important, and ending with least important.
2. Set your goals based on your values.
3. Determine your income.
4. Determine your expenses. It is a good practice to obtain and keep receipts of all of your expenses, even the small ones. You have to know where your money currently goes; and determine where you want it to go.
5. Create your budget. Your budget is defined by time, as in some fixed period, for example: a week, a month, a quarter, a year, etc… You will need to adjust the time for some expenses to match the period of time that your budget is in effect, for example, a weekly expense amount must be multiplied by 52 to obtain the amount spent during the year.
6. [Optional] Review periodically. Note the budget has already been created at this point, but it’s a good practice to periodically review your progress. You may consider revising your budget should some major event occur.