Getting started and managing your budget can be difficult. Find out how to get your personal finances in order by creating a solid budget in 4 steps


Looking to get your finances in order, but don’t know how to go about it? Setting up a budget is a great way to start. In this article, we’ll explain what budgeting is, its benefits and how to create a solid budget that will allow you to manage your finances, with ease.

Creating a budget to manage your finances: why?

Creating a budget is important for anyone who wants to take control of their finances. A budget can help you track your spending, save money and reach your financial goals. By planning your finances with a budget, you will be able to:

  • Knowing exactly where your money is going: this can help you identify areas where you may be spending too much money and make adjustments accordingly.
  • Manage your debt: a budget can also help you control any debt you may have by creating a plan to pay it off.
  • Save money: by knowing where your money is going, you can better allocate funds to savings. Having a budget in place can also help you resist the temptation to overspend.
  • Improve your financial health: Overall, budgeting helps improve your financial health by giving you a better understanding of your finances and helping you make informed spending and saving decisions.

How to make a budget

There are many ways to create a budget. However, the basic principles are the same: determine your income, define your budget categories, allocate your income and adjust your budget as you go along.

Step 1: Determine your income.

Your first step in budgeting is to calculate your income. This includes all the sources of money you bring in each month, such as your salary, investments, interest, and any other form of income.

This income may also vary from month to month. Be sure to consider all of the actual income available for your budget.

Step 2: Define your budget categories:

Now that you know how much you can use in your budget, define what you want to allocate those resources to.

Identify your monthly expense items:

Start by making a list of all the expenses you have to meet during the month: food, rent, groceries, phone bills, and gas… . Make sure you don’t forget anything. You can also check your bank statements from previous months to make sure you have everything covered.

Next, to simplify your budget management, classify these expenses according to their nature.

You can sort them by type of expense, such as :

– Home expenses: all expenses related to your home,
– Functional expenses: such as transportation, telephone subscription…
– Leisure expenses: like Netflix subscriptions, and outings.
You can also classify them by fixed or variable expenses. Fixed expenses are those that remain the same each month, such as rent or credit payments, while variable expenses fluctuate, such as the total amount of your groceries, or your spending on outings and entertainment.

Identify your future expenses:

To avoid unpleasant surprises, don’t forget your future expenses. An ideal budget should also anticipate the upcoming expenses you’ll face, with money set aside each month.

You can add categories for your next car insurance policy that you pay for every year, gifts for the family at the next holiday party, or for your taxes.

Meet the unexpected with an emergency fund:

Finally, a great way to deal with the unexpected of any kind is to set up an emergency fund in your budget. Whether it’s for a car breakdown, medical expenses, or an unexpected bill, the emergency fund will allow you to cover these expenses without upsetting your financial planning.

To build an emergency fund, identify an amount of money that you feel is sufficient (between 1 and X monthly income), and set aside each month to reach that goal.

Finally, if you need to use some or all of your emergency funds, consider rebuilding it afterward.

Be sure to include savings in your budget:

When creating a budget, be sure to include categories for saving. This will ensure that you are setting aside money each month to meet your financial goals. Savings categories can include things like preparing for your retirement, investing, or building a fund that will be used for your children’s school fees when they need it.

Step 3: Allocate your income to your expenses and savings to create a projected budget.

Now that you know how much you can use in your budget and in which spending or savings categories, it’s time to move on to step three: Allocation for each category.

To identify how much you need to allocate to each category, look at the types of expenses:

Fixed or Variable Monthly Expenses :

For fixed expenses, it is sufficient to plan in your budget the amount you expect. However, it is not so obvious for variable expenses, whose amounts can be difficult to identify. To do this, base your budget on your habits of the previous months: take your bank statement and calculate how much you spent last month in a particular category.

You can also set aside your first month of budgeting to identify your habits: estimate an amount and track your spending in each category throughout the month. Don’t try to change your spending habits, but understand them so you can build on them in future cycles.

Future Expenses:

If you have future expenses you need to meet, don’t wait until the last moment to set aside the amount you need to pay. Instead, do it gradually each month. This will prevent you from having to pay a large sum at once, turning your entire budget upside down.

To do this, calculate how much you need to set aside each month to be ready for the day you need to pay. You then have the choice of setting aside the same amount each month or adjusting it according to your future income. The main thing is to build up all the money you need to pay on time.

Emergency Fund and Savings:

It would be a good idea to save only what is left over after covering everything in terms of expenses. Instead, make room for enough savings by optimizing the amounts allocated to other categories.

Review your expenses, and identify which categories to optimize and by how much.

Step 4: Track Your Spending:

The final step is to set up a way to track expenses against your budget. There are several ways to track expenses, including using a budgeting application, Excel spreadsheet, or another similar tool. You can also simply record your expenses in a notebook.

Whichever method you choose, make sure you stick to your budget plan as closely as possible, update it regularly, and adjust it to make it personal and achievable.

In addition, your budget is not set in stone, it must be flexible to take into account changes that may occur, in income, expenses, or in your habits. When you start tracking your expenses, you may find that some of your estimates were too high or too low. Make adjustments to ensure that your budget accurately reflects your actual spending habits.

Managing your budget: the key to regaining control of your finances:

Your budget is of the utmost importance to get a complete picture of your financial situation. It is the first step to further optimizing your personal finances. That’s why it’s important to take the time to optimize and control it.

Instead of tracking your accounts on a day-to-day basis, you will have a global picture of your finances, and plan on a monthly, if not yearly basis.


Hopefully, this article has helped you understand the basics of budgeting and given you some ideas on how to get started. Remember that every situation is different, what works for one person may not work for another. The most important thing is to find a system that works for you and stick with it. If at first, you don’t succeed, don’t give up! Budgeting takes practice and the more you do it, the easier it will become.

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