Learn about budgeting process steps.
Discover how to create a budget for any household or business with these simple steps.
For a lot of people, “budgeting” can be a scary word. The process of creating and sticking to a budget seems complicated, tedious, and ultimately, challenging to follow through fully — but it doesn’t have to be that way. By following some simple steps and committing to the process, you can become a budgeting expert in less time than you think.
Five easy steps to create a new budget.
Whether you’re creating a household budget or managing finances for a business, most budgets are created by following the same basic steps. Master these, and you’ll be able to create a budget for almost anything.
The five steps to creating a new budget:
- Identify all sources of income: Make sure to account for fixed income sources (such as salaries) and variable income sources, including sales, investments, or bonuses.
- Account for any applicable taxes: This is especially important for business owners or people who are self-employed.
- Identify recurring expenses first: When budgeting, always ensure to account for all monthly recurring expenditures before accounting for your variable expenses.
- Set aside extra money for miscellaneous expenses: When budgeting for your variable expenses, always add a little extra “cushion” to account for unexpected spending.
- Create savings goals: If you still have money left over after your expenses are covered, create savings goals to help you put that money towards a larger purchase down the line.
The best way to keep all this information organized is to tabulate it in a spreadsheet, then export it to a PDF so you can keep a printed copy handy for easy reference.