Yes, yes, we all know how important it is to make a budget (and follow it). There are a lot of tools out there that can help you. In practice each and every financial institution offers free interactive grids that can simplify your budget planning. So no need to start from scratch!
Calculate your income
You have to start by calculating the total of your income: net salary (after tax deduction), loans, bursary, and donations from parents if you are a student, tips, etc. If your income is not the same each month, simply calculate a reasonable average.
Calculate your expenses
The ideal thing to do is to check your latest bank account statements to precisely take note of how much you spent during each of the previous months.
- Weekly expenses: grocery shopping, coffee shops, restaurants, gas, etc. If you tend to make a lot of weekly payments and you want to know the monthly total, multiply amount by 4,3.
- Monthly expenses: rent, electricity, gas, insurance, repayment of your loans, public transport, phone, cable, internet, etc.
- Yearly expenses: driver’s license, car registration, tuition fees, clothes, leisure, vacations, gifts, furniture and maintenance. You have to divide the total amount by 12 in order to know the monthly results.
- Savings and investments: not to be forgotten! This money can be used with medium term projects, such as travel. It can serve also as payments for credit or as financial back-up for any unforeseen event.
Evaluate your budget
You spend more than what you earn? Maybe you should think about limiting some of the unnecessary expenses, changing service providers or renegotiating your contract.
You have some money left at the end of the month? Great: your budget is most probably well balanced.