Simple & Effective Ways to Make a Budget (2024)

“Every day is a bank account, and time is our currency. No one is rich, no one is poor, we’ve got 24 hours each.” –Christopher Rice

Your choices in life plays a vital role in your journey. It determines what path you’ll go on and how your life change through time. In terms of Money, a lot of people will say that it’s a waste of time to focus on it, since you can’t use it once you die. If you see money as a means to spend, then that belief will probably be true. But if you see money as a security not only for yourself but also for your family, then that belief is definitely wrong. You can choose to spend all of your money for fun and buying things that you don’t need, but once the time comes that you need it and you don’t have, then you can right aways face death in front of you. In this current society, money plays an important role for someone to be secured. From health, situations, conditions, money can provide you help and assistance and that’s a fact. You can’t have medicine without having money. You can’t have plane tickets or transportation fees to see your love ones without money. You can’t talk with your family and friends far from you without money to buy phones. You can’t apply work if you don’t have means to apply online or even personally go to their company.

In this era, money became a necessity to everyone.

With those situations mentioned, everyone can see the purpose and use of money from their daily lives. That’s why, money should see as a security and not just a thing that you’ll just spend. Now that the quality of life is developing every now and then, the cost of goods and services also is getting higher. From transportation, education, food, utilities, everything is getting higher and higher as time goes by. For sure, few years from now it may be doubled or be more than that. It’s inevitable and anywhere you go in this world, the prices of goods and services will be the same. Nobody can runaway from it, so you better choose the right lifestyle fit for your needs and not according to your wants. The earlier you identify it and be used to in that kind of lifestyle, the easier for you to make plans for your finances. Now, you need to ask yourself,

Are you financially ready for that change?

Did you already made necessary steps to be secured?

Until when that goal can cover your lifestyle choice?

After realizing all of these challenges present in your life, you now need to assess yourself on things that will help you to be secured. Review your past years and choices for you to be able to come up with plans for your future. Now, this is when a right budget plan can help you to achieve your financial goals easily. You’d been hearing for sure from some financial advisors or maybe from your parents who talks about the spending of your family, but have you tried doing it for yourself? When you started your first job, did you achieved any financial goals or targets that you set for yourself? If the answer is NO, then this blog will guide you to come up with a right plan fit for you. If you are really decided to have a big change on your finances, you need to put efforts, be dedicated and lastly be consistent. There’s no perfect plan if you won’t pursue it. You play a big role in this change that you wanted, that’s why you need to have the right mindset. In order to develop your mind in this sudden shift, you can slowly introduce financial management first in your daily life. Here are some tips that can help you:

• Try making a sample budget. You can try using different templates available online.
• Slowly list down your daily expenses.
• Watch Financial management tips available online.
• Listen to a podcast about wealth management every day.
• Read books about finances

As soon as you introduce financial management to yourself, everything will slowly shift to it. You’ll see how your focus and priorities change because those new things that was introduced to you, will help you to inspired and be motivated in your new venture. Once you already have the basic idea on how money works, you can now start to apply it in your life. Starting with a budget will your great stepping stone on this change that you want for yourself. On this blog, you will learn the things that you need to consider in making a budget, and it will also guide you how to make it effective.

“Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.” –Ayn Rand

Now, here below are some tips that will help you in this new change in your life that you’re about to do. All the best!

Having a goal stand for a certain purpose. In terms of budgeting, a financial goal is the basis on how you draft your budget. To be able to achieve the goals that you set for your finances it should be supported by certain actions and strategies. That’s why, it is very important to set your goals first before making a budget. Now, in setting your financial goals, you need to take in consideration different factors. You need to thoroughly assess everything to come up with a list of goals that you can do for a year. If you are new to this, you can start first in making a yearly financial goal which should address more of your savings rather than your expense. The number of goals will all depends to you but it is ideal to start first in making a list and break it down based on its importance. The rest of the goals will be intended for the next year and so on. To have a clear assessment of your goals, it is better to have a one-year timeline so that you plan out each month’s target and strategies. To give you an example, here below is the illustration that you can use for reference:

Once you get the opportunity to manage your own money, take that chance to do it properly. You can also pay yourself first and then go on with setting up your budget. The younger you are, the more it is required for you to do it. Simply because most of young generations still don’t realize the essence of savings not until they reach the real adult life. It’s ok to be at ease at first and live your life to the fullest, but the question is until when? There will be a time in everyone’s life that you need to take responsibility of it. No one can be exempted from that situation so it is better to realized it sooner so you can start to take an action. Be proactive especially if it deals with your life. You need to train your mind to focus on things that matters. Just because you focus on savings and investing, it doesn’t mean you are compromising your happiness. You can actually do both.

In making a list, you should not mix up everything since it will just make you more confused. Focus first on your current savings followed by your monthly expenses. Having list will give you an idea on where your money goes every month. For sure, you experienced before asking yourself where your money goes because in just instant, everything is gone. That happened commonly for those who doesn’t track their cash flow and for those who don’t make their own budget. By doing this step, you can break down your progress every month because you will have an insight on what your current savings are and your usual expenses. You can adjust easily your budget if you prepare a list of your savings and expenses. This will really help you if you do it in a right way. You can use different method to keep your records which will be tackled in this blog.

Once you’re decided to make a list, you can start it on a monthly basis and then you can do it consistently for the rest of the months. This would help you to assess your cash flow for the whole year so you can prepare your budget for the next one. Right record keeping will help you especially if you have a family right now. By taking the initiative to do this, you can have a meeting with your spouse or your kids so that all can be aware of your cash flow. Rather than thinking where it went, it is more ideal to have records which you can always review and look back. You also don’t need to worry because this step is not that hard, you just need to list down your current savings and your expenses together with your budget intended for it. Here’s the example below for your reference:

This step is important part in identifying your current financial position. The more you are aware of your finances, the more you will be cautious to spend. Especially if you do this consistently, you will start to divert your mind in different savings opportunities rather than having more expenses. Things will move slowly according to what your mind had set. So, take this as your sign to start managing your finances like a pro. Regardless of your age and situation, anyone can manage their finances if only they determined to do so. There’s no wrong in trying, rather than having no savings at all, see this as your chance to expand your savings. You’re the only one who can do it for yourself, no one else will. So, it’s your choice if you want to achieve your financial freedom or you’ll just go with the flow.

“Wealth consists not in having great possessions but in having few wants.” – Epictetus

To be able to sort out your mind in choosing your priority, you need to consider three things which are timeline, current situation and its importance. Considering these three will help you to set up your priorities easily. Rather than thinking randomly, it is more effective to consider these requirements. To give you an idea the importance of each, here below are some of the information that can help you:

TIMELINE. If you plan to make a monthly budget, then than priorities should be achievable within that period as well. Coming up with a list of things without assessing the period you will work on it, will just ruin the whole plan. This will also help your mind to set the strategies that would help you to settle that priority. If you know that it seems impossible to do so within a month, you can choose to continue it on the next month but you need to set the first target for it.

Example:

You want to invest P50,000.00 on one a business that your family wanted, but you only have extra P12,500.00 from your monthly budget. So, to be able to achieved that amount, you need to set at least four months to achieved it. Not unless you still have more sources of funds, then you can reduce the months that you’ll work on it.

CURRENT SITUATION. Your current situation also plays a big part on this because that’s how you can determine your capability to source funds for your savings and expenses. You need to assess your current source of funds and there you can divide each according to your priorities. The bigger your cash flow is with minimum expenses, the faster you can achieve your targets.

Example:

You want to take an insurance plus investment package which cost P5,000.00 a month and payable for minimum of 10 years but you don’t have yet a secured job. The probability of this target to fail is high since you don’t have yet secured job to suffice the funds that you need for the monthly payment. That’s why you need to know first your capabilities to pay/save consistently before taking another financial venture.

IMPORTANCE. This is the most important part that you need to consider before making a plan or setting your priorities. You need to ask yourself if it’s the right time to start it and how that priority will greatly help you. You can not just jump into something that you won’t think about. You need to thoroughly assess everything so that there’s higher chance to achieve it.

Example:

After you graduate, you want to start a business but you still don’t have any sufficient background and idea on how you do it. Not unless you already been in a business while you’re studying and have the funds to do it, then you can go on and establish your own. You need first to think the importance of that plan and consider the time you want to do it, before concluding anything. Ask yourself these questions:

Am I financially ready on the outcome of this whether its negative or positive?

If I’ll be focusing here, are my other funds will be ok?

Do I have enough knowledge and experience to have my own business?

With the help of these three, you can easily decide the things that you need to prioritize. Just remember that, it is important to build first multiple streams of income if you are young. That strategy will help you to be more secured and safer if ever you wanted to take a risk like starting a business. To give you an idea of the process that you can use, you can simply first acquire a long-term investment like Insurance, followed by other medium-term investment (maximum five years) and lastly a passive income stream (business, rental etc.). The more you are secured, the more you can take a risk. So, it is best to secure yourself first by getting the right investment before jumping into something that is still tentative.

“Do not save what is left after spending; instead spend what is left after saving.” – Warren Buffett

Probably you’ll ask why you should start listing your saving priority rather than your expenses. Well, if you’ll go back to one of the famous sayings about saving by Warren Buffett, you’ll have your answer. It’s been a practice of a lot of people to sort out first their expenses and whatever left will be for their savings. That formula will mostly result to overspending and in the end, you are left with nothing. Not unless you learn to cut down your expenses and stick to a specific amount, that’s the only time you can change your bad habits. Had you ever heard some of your friends talking about not having any savings at all after years of working? For sure that is one of the common statements of people who use that formula. So, if you don’t want to be in the same situation like them, you need to shift your mindset and change the formula that you are used to.

As soon that you follow the right formula, that’s when you can start to list down your priority savings for the month and your expense list. Why you still need to make a list? This is for you not to missed anything and put the right amount for each. Like what is always mentioned on this blog, you need to specify things for you to know where your cash went at the end of the month. In this phase as well, you can identify your current savings which can help you to plan out other investment opportunities if ever you still have enough cash to save. To give you an idea about savings and expenses here are some information that you can base your budget:

SAVINGS: Are funds which can help you in your future. It can be short-, medium- or long-term kind of savings. Some examples are the following:

Retirement fund, Insurance, Business Fund Real Estate Investment, Local Banks & other types of investment, etc.

The more you have savings, the more you can be secured in the future. Once you made a list of your current savings, take the chance to assess it and see an opportunity make it grow. The earlier you prepare the earlier you can also gain the benefits from those investment you made. You just need to make sure that you have enough sources to suffice whatever investment ventures that you want to try so that it won’t compromise your other financial priorities. Set a timeline for a new investment that you wanted to have so that you can still have enough time to save for it or to adjust your budget.

EXPENSES: Are things which you address on a daily basis. Some examples are the following:

Car Expense/ Transportation, Groceries, Food, Rental fees, Leisure, Internet, Phone Bills, Utilities, Tax etc.

These expenses are the ones that you can easily cut down little by little. If you wanted to make space for another investment, you can try to look for your current expenses that you don’t really need or the other things that you can adjust. This will be very challenging if you are used to a kind of lifestyle for so long. It requires determination to do so and it for sure will take time for you to adjust. Once you make the decision to focus on your goals, everything will slowly align according to it. You need to trust yourself that you’ll make it happen so that your mind can shift to what you manifest.

“If you want to be happy, set a goal that commands your thoughts, liberates your energy and inspires your hopes.” – Andrew Carnegie

It’s not that we don’t care. Let’s just say that we focus on what matters.

In making any plans, one thing that you need to do is to specify things. The more it is specific the more it will be clear and easily to understand. Since you are making a budget for yourself, planning things specifically will help you determine the important things that you need to address within the month and some which can be delay or adjust. This will greatly help you to organize things and to sort out your mind by putting your priorities first. Not only in making a budget, being specific with any plans you make in your life will guarantee a positive outcome. Here are some samples of goals from general to specific one:

• GOOD: I want to lose 6 kg within a year.
• BETTER: If I want to lose 6 kg within a year, I need to first work on cardio exercises, track my calorie intake and set a target weight loss of 2kg every three months.

• GOOD: I want to retire at 50 years old.
• BETTER: If I want to retire at 50 years old, I need to first build my retirement fund and set a target amount of _____ every year, make another source of income by investing in __________, and settle all of my financial obligations like _______.

• GOOD: I want to be a director before I retire.
• BETTER: If I want to be a director before I reached _____ years old, I need to make sure that I am promoted and have a consistent growth from this current position. The way to do that, I need to invest in myself more by gaining credentials like trainings and certification. Other than that, I need to have the right company where there’s growth and opportunity to step up.

The more specific the plan is, the more it will be attainable. This is also the reason why most goals are not met because they failed to be more specific in making it. You need to have the right strategy to apply in every plans you make. You need to trick your brain that things you wanted is as easy as it by choosing to work on it step by step. The more you look in the bigger picture, the more it looks like impossible to do so. You can also use the method SMART which stands for Specific, Measurable, Attainable, Relevant and time bound in making your goals. It has been a practice of many and was proven effective based on studies. This is very well recommended by professionals in the field, so trying to use it will surely be a right choice. All of these things mentioned on this blog, contributes to your success. You need to take things professionally in order for that thing to be effective. You can only prove that by means of trying. Choose to be proactive and let the outcome speaks for all your efforts.

“Our goals can only be reached through a vehicle of a plan, in which we must fervently believe, and upon which we must vigorously act. There is no other route to success.” – Pablo Picasso

Even though you already have a budget, it doesn’t mean that it will always go according to it. Budget serves as a guideline for you to make the right decision but there are also things that you are not in control. Changes can take place anytime in your life, so in terms of budgeting, it will be more ideal if you have an amount separate from your budget that will address those changes. That’s how your emergency fund can play its role. In any situation that will requires money which is out of your budget for that month, your emergency fund can address so that it won’t affect your whatever plans you set for the month. If that case only requires a minimum amount, you can also adjust your expenses budget by cancelling some it which you think can be delay for some time. In this aspect, you need to be very determined not to touch the amount for your savings because your efforts will be wasted. Learned to adjust your expenses rather than your savings. so that you can be more disciplined in handling such situations.

To sum it up, you have three choices to do if ever you’ll encounter situations that may affect your budget. Here are the following:

1. Deduct it from your emergency fund. This option is ideal if it requires big amount of money.

2. Take away some of your expenses budget. This is for small amounts and if you can still adjust your expense budget.

3. Allocate an amount in your monthly budget to address sudden changes. If you won’t use it, you can simply add it to your expense amount at the end of the month.

You need to be very dedicated in making a budget. You should be aware on different variables that may affect it in order to create a suitable plan beforehand. Remember that being proactive is better than taking an action during the situation. Before the month start, you need to list any changes that you think may take place so that you can consider it already in the budget plan that you’ll make.

Just because you already made a budget, it doesn’t mean that it will end there. It is very important that every end of the month, you need to assess and track your cash flow so that you can see your progress from following your budget. As long as you start this, it will help you to change your mind in handling your finances. You’ll be able to have an insight on where your money goes and the adjustment that you can do for the next months. This task is not that hard like what you are thinking, you can simply put the budget you intended for a certain things and review on the last month if you achieved or overspend on some part. Efforts requires in everything that you want to accomplish in life. So, if you wanted to make a change in your financial position, you need to know the necessary things that will help you. Rather than seeing it as an added task, you need to think that everything is for your own sake. It’s either you wanted to learn and change your life, or just stick to what you are used to. The more you do this, the easily it will be for you to adjust things the way you wanted. You can use different platforms available such as:

Budget Application. There are tons of application available right now which you can simply input your expenses and savings. You can just download it in your mobile or laptop and explore its features. Here below are some of the best savings’ app in 2022 according to nerdwallet.com:

• Good budget, for hands-on envelope budgeting
• Mint, for just about everything
• YNAB, for hands-on zero-based budgeting
• EveryDollar, for simpler zero-based budgeting
• Personal Capital, for tracking wealth and spending

Excel. In using excel, you are free to make your own sheet according to what you prefer. You just need to learn the basic formulas and there you can slowly explore the rest. This will be very convenient once you master using the formulas because you just need to input the amount and the formulas will work for you.

Lay Out. If you are not a techy person, you can also use different budgeting layouts available on the internet. Some you can avail free while the rest requires you to pay for it. Just choose what’s convenient for you to use and you can simply print it.

With these options above, you will not have any excuse not to do this. The power of digital world makes our life very easy but few choose to use it efficiently. Now, you need to see every opportunity present in front of you to be able to see the things that will really help you. Rather spending most of your time in your social media accounts, why don’t you try to sort out your finances and use what the digital world offers? Isn’t it more ideal? Remember that in achieving goals, you need to develop first a good habit that will help you to be align on the path towards it. There’s no shortcut to success. So, if it requires specific things like this, grab the opportunity to know it and you’ll see how your life will change drastically. See this chance as your way to practice yourself once you have your own company. Manage your own finances as if you are managing a big company. Start from there and see how this act will impact your future.

“The poor and the middle-class work for money. The rich have money work for them.”– Robert Kiyosaki

Nowadays, having a savings is very important. Given the price hike every now and then, it is very ideal to have a budget that can serves as a guide in managing your cash flow. Without it, chances are you’ll overspend and there will be no left for your savings.

Few people realized the importance of a budget. Of course, not everyone knows how to do It properly, so they just choose to manage their money by their own way. In this blog, it tackles about different ways on how to make an effective budget.

With all the details below, this will surely help anyone to acquire necessary information so that, they can start their own budget. This step is one of the requirements to achieve financial independence. It has been a practice of different successful people and big companies.

You will never go wrong if you try making one.

START IT TODAY.

“The slightest adjustments to your daily routines can dramatically alter the outcomes in your life.” – Darren Hardy