How to Budget
Posted on September 21, 2008
Filed Under Free Financial Course |
(This is a continuation of the lesson: How to Budget and Net Worth)
Learning how to budget can increase your savings, investments, and Net Worth.
Throughout all of our lessons we will be discussing ways to increase your personal net worth. However, one of the most basic and most important ways is to save more money each month. Increasing savings requires a budget.
A budget allows you to see where you are overspending and to take corrective action. The most important part of a budget is constant review and discipline! So, fill out a budget spreadsheet and review it each month. In future lessons, we will discuss ways to reduce spending and save even more money.
Create a Budget
Now it’s your turn to determine your budget. Please follow the link, where we have provided a blank free budget worksheet for you to fill out. Once you have completed the budget spreadsheet return here and complete the lesson.
The spreadsheet includes a “Planned Budget” and “Actual Budget”. As you consistently review your budget each month, you will discover ways to save even more money.
Here are some basic instructions for filling out the Budget Worksheet:
- Fill out the first column on the spreadsheet labeled “Planned Budget”. This is your GOAL to achieve each month. This column will represent the amount of money you hope to spend in each of the given categories.
- Fill out the “Actual Budget” as the month progresses. This will help you see where you are overspending.
- Compare the Planned Budget to the Actual Budget at the end of each month. As you focus on saving money, you will surprised at the many different areas in which you can cut back your spending!
Also, note on the Budget Spreadsheet that some of your expenses are labelled “Necessary” and others are labeled “Discretionary”. Try to eliminate as many discretionary expenses FIRST, and then look to other categories to save more money.
Download: Free Budget Calculator
The important thing to get from this lesson is that the more money that is spent on wealth-building Assets versus non-wealth building assets, the faster you will achieve a higher net-worth. This also defines good debt and bad debt. You are encouraged to continue to use our Budget Calculator and Net Worth Calculator. You should continually assess where your budget is each month and you will notice your net worth increasing.
Review items discussed:
In order to get the most out of these lessons; apply these items immediately! As you do, you will be surprised how much money you will be able to save.
- 1: Complete the Net Worth Spreadsheet
- 2: Complete the Budget Spreadsheet
It is recommended that you take your time in completing these tasks in order to do it right. Now that you know how to budget and calculate your net worth, move on to our next lesson: Improve Credit Score.