The word ‘budget’ sounds so deceptively simple and the arithmetic behind the concept so basic that nobody seems too interested to talk about it. It is, however, translating the additions and subtractions in the paper to real life where the word suddenly becomes complicated. Not a very high percentage of the population can honestly claim that they are working well within budget.

There are, however, steps to make a budget at the beginning of the month that would be near the actual figures.

1)Calculate your actual income. Be objective about how much you really earn. Aside from your salary, include the money you get from tips, part time jobs, investments, professional fees, etc.

2)Calculate your total expenses. Some expenses are fixed, while others are variable. Fixed expenses are those that you know up to the last cents. Examples are debts like car payment and student loan, or payments for lease like that for your apartment. Variable expenses are those that you always see coming but have a bit more control as to how much they will really cost like food, electricity, etc. While you cannot do something about fixed expenses, your chance lies in reducing your variable expenses as much as you possibly can. You might make a realistic goal on how to save on electricity and water or how to spend less on food without sacrificing proper nutrition.

3)Prepare for the unpredictable. Don’t let unpredictable events like ill health, accidents or death dig you into a hole that would be pretty hard to get out of. At the least, get a medical insurance because it is usually when someone in the family gets sick that financial burdens begin to mount.

4)Do not skip on investments and savings in your budget. If you think you can postpone saving for the future or making worthwhile investments until the grass hopefully becomes greener, think again. Be aggressive in including while making a budget, even if it means things would look really tight. Including them in your budget would also motivate you to find ways to increase your income rather than ignore the fact that you have to prepare for the future.

5)HONESTLY subtract expenses from your income. From your actual income, subtract your expenses INCLUDING items in steps 3 and 4 (insurance, investments and savings). You are lucky if the difference is a positive number. If not, that means you are being brutally honest with yourself and should proceed to step 6.

6)Find ways to earn extra income. Making a budget is not just about trying to make ends meet with the little money you have. It should also involve finding ways to earn more so you will have enough to get around. What talents or skills do you have that can be a decent source of additional income? Most probably, you have it already. It only needs bold steps from your side and finding a market for it.

Making a budget is not as easy as it appears. It requires due diligence, honesty to oneself, foresight and the courage to act on what needs to be done. Nevertheless, it is achievable and can be very rewarding if you put your heart to it. Good luck!

make a budget