Is it easy creating a budget?

The first step to managing your finances is to create a budget and stick to it.

07:26 17 December 2013

One of the reasons why many people get into financial difficulties is they do not understand how to create a budget.

Personal financial planning is not something that is taught in our formative years. It is generally taught in college, if it is taught at all, and by that time, many people are already experiencing financial difficulties. This is because they have never learned how to manage their finances properly.

Here are a few steps to creating a solid personal financial plan:

• Start with a monthly budget. This lists all your assets and expenses for the month and will give you a clear view of your financial situation. Start by listing all your expenses, including ones you pay for in cash, for a month.

 

• Spending a month creating this list does not mean that you cannot create a financial plan without it. You can, you just need to mark it as a projected instead of an actual.

 

• Create an actual and a projected budget for each month. The projection will list what you are planning on spending and what you are planning on having available as assets. The actual listing will provide you with a more accurate view.

 

• Projected budgets are created at the end of a month looking at the next month. Actual budgets are created at the end of the month when you have finished with all the expenses for that month.

Keeping these two different types of budgets in mind and creating them each month can go a long way to ensuring that you stay out of financial difficulties, if you are already experiencing difficulties these plans can go a long way to helping you create a budget that will get you back on track.