3 Ways to Help You Learn to Create a Monthly Budget and Save More

Learning to budget your money is simple for some and a bit more complicated for others. Some simply don’t know where to start; it’s not easy to go from not having a budget to creating one after years of operating without one.

However, creating a budget can help you save your finances. Here’s how.

Start by calculating your income

The first thing to do is account for every dime you bring in each month. This can include anything from your paycheck to disability to alimony and anything else that puts money in your pocket on a regular basis. In addition, any rental income or royalties count as income.

Create a list of when you receive your money and how much you receive, then total it up to see how much you bring in each month. It’s not advised you consider your pre-tax dollars, however.

Calculate your expenses

Your monthly expenses are the things you pay for each month, no matter what. This includes your mortgage, utilities, insurance, vehicles, gas, groceries, and even your entertainment. Ideally, it should also include your savings.

Experts recommend treating your savings account as an expense in the sense that you pay money into it each month. When you treat it this way, you’re more likely to contribute to it before deciding you haven’t enough extra money left over, on a regular basis.

Calculate your debt-to-income ratio

Now that you know how much money you have coming in and going out, subtract your expenses from your income. What’s left is extra. Now you know how much you have to budget each month, how much extra you have, and where you stand.

If you find you aren’t comfortable with this ratio, try to make some adjustments. You can look into paying off your high-interest debts, refinancing your mortgage so that you’re paying less mortgage interest, or even eliminating needless expenses such as a daily trip to the coffee shop or a weekly manicure. In the end, if you save enough, you might even be able to afford the biggest luxuries of life like your dream house in New York.

Saving money and budgeting isn’t simple for everyone. However, it’s important to budget and save even if you have plenty of extra cash left over at the end of each month. A budget helps you to see where your money is going and how it’s being spent.

It also helps you to see exactly how much of your money you waste every month, once you know you should have X amount of money left over and yet it’s not there.