Having a solid budget is a fundamental building block in becoming financially independent, so here is a breakdown of the purpose behind budgeting and how to create and stick to your own budget.

Budgeting can be a wonderful thing if you allow it to be. A budget is essentially a breakdown of everything you earn and spend and by staying on track of your budget you can stay out of debt.

To create a budget, you will first need to calculate your income. If you have a salary you likely already know how much you make every month, but if your income fluctuates regularly this may take you longer to figure out. If your monthly income is regularly changing you should take a look at how much you made for the last six months and pick the lowest number and build your budget around that to be safe.

Now it’s time to add your average monthly expenses. Take your time with this so you know it’s accurate. Look at your bank statements for the past three months and identify your regular monthly expenditures. Divide these expenses into what’s necessary and what you can live without. For example, many people know that every month they have to pay their rent, utilities, car payment, phone bill, credit card and groceries no matter what. Then look at other monthly payments you know you could live without but you’re not going to, some examples of these are Netflix and Spotify and add those to your list so you can make sure you budget for them.

Add everything listed together and that number needs to be your minimum monthly income. So, no matter what you need to make sure that you are making enough money for those items to be paid for every month. You fall into debt when you make less money than your

minimum monthly income. Now you can make a budget for the things you know you would like to do or have, but that you know you could also live without. This is also when you can make a savings plan for how much money you’re going to put away every paycheck if you’re saving up for something or you just want a rainy-day fund.

Congratulations, you’ve created a budget! Now sticking to it is the real hard part. Apps like Mint and Qapital make sticking to your budget easy if you’re comfortable linking your banking information to them. If you primarily use cash, write it down so you can stay up to date with your budget.

Any goal is within reach if you have the right mindset and budgeting will help you stay organized and get you one step closer to your financial goals!

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