The first step is the most obvious: figure out how much money you will have available to you in a given period of time. For the purposes of these steps, designate a single month as being that specific period of time. The available-money figure represents the starting point of your budget. Ideally, it looks like a nice, comfortable number. Unfortunately, it probably won’t look that way for long, but that’s one reason why budgeting your finances is so important. Remember, you want that number to stay healthy and provide a cushion, should something unexpected arise.
Next, subtract your known costs. Items like your rent (or mortgage), for example. Other monthly costs ¾ such as auto insurance, a mobile phone bill, and internet expenses ¾ should also be subtracted. Now look at the number. There are still two steps left, but at this stage you should have a better idea of where your budget will end up. The third step is optional but important. Figure out a percentage of the amount of money left over, after known expenses, to put into a savings account. Five, ten, fifteen percent…it doesn’t matter. What matters is that this percentage will help in the future, by accounting for expenses that you had not anticipated.
The last step is deciding what to do with the money you have left over. Think of this as the “reward” step: the one you can make without feeling guilty. It’s the assurance that, through your savings and smart budgeting, your finances are secure. Try to save a little more each month and stick to your budget, and each month will be a little easier than the last.