Creating a Budget

Managing personal finances effectively begins with understanding where your money goes. By tracking your spending, you can gain a clear picture of your financial habits. This lays the foundation for better financial management and helps you make informed decisions about your spending priorities.

Track Your Spending

First, it's important to figure out where your money is going. Tracking your spending will help you visualize your purchase and highlight spending leaks. Spending leaks are small, impulse purchases that can add up over time. There are many different methods for tracking your spending, including:

• Pen and paper
• Excel
• Money management app
• Online banking app

Prioritize

Once you've tracked your spending and looked for leaks, you can start to think about your priorities. Prioritizing can help you determine how much you need to allocate for each item in your budget. For example, if buying coffee every morning is a priority for you and something you enjoy, make sure to include coffee in your budget. You can use your tracking method to ensure your spending aligns with your priorities. 

Consider Your Resources

Next, you need to consider your resources. What is your income? Are you using a loan refund to pay for living expenses? If you're using a loan refund, remember that you will have to pay those funds back with interest. You may need to adjust your priorities to align with your resources or income.

Create Your Budget

After you've tracked your spending and determined your priorities, you'll be ready to create your budget. A budget will help you plan your spending to ensure you will always have enough money for the things you need and the things that are important for you. Remember to include your housing expenses along with your regular purchases (and don't forget savings!). You should continue to track your spending to make sure you stay within your budget.