How to create a personal expense budget?

Many people do not consider a budget as something to go by when it comes to spending and
monitoring your income verses expenditure. Well, this a pretty huge mistake because for you to have
control over your personal expenses and set some financial goals towards your success, then a
budget is crucial. This article will provide you with some easy tips on how to create a personal budget
and use it as a tool to gain financial freedom.

What is a budget?

A budget is simply a written financial plan for a set period of time; mostly a month or year. A
household budget will include things like utility bills, transport, food etc. against your total income.
Spending without a budget makes it hard for you to know your cash flow against your spending.

Importance of a personal expense budget

 It allows you to plan on how to effectively utilize your income; what to buy and what not to;
and when.
 It enables you to track your spending patterns and account for every coin you receive.
 A saving culture for investment and future eventualities becomes easy when one has a
 A detailed expense budget paints you a clear picture of where your money is coming from,
your current cash at hand as well as where it all goes every month.

Simple Steps towards creating your personal expense budget.

Write down all your sources of income.

Take time and understand all the avenues through which your money comes in. For instance if you
run a business(s), how much do you take home as profit after tax. If you have a job that earns you a
salary, what is your net salary. If you have some passive income, how much per month. Then get the

Create a list of your entire monthly expenses

This is a list of everything you spend your money on including water, electricity, fuel, gas, food,
entertainment, insurance, school fees, transport, rent/mortgage, emergency, savings etc.

Categorize your expenditure list into 2

Your list should have total fixed expenditure and variable expenditure put separately. Fixed expenses
are mostly constant each month e.g. rent, credit card payments, cable etc. whereas variable
expenses keep changing from month to month e.g. entertainment, food, emergencies etc.

Live within your means

It is disastrous to spend more than you make because you will end up owing. To avoid that, review
your expense patterns from time to time and make sure after spending you have a certain
percentage left to take to the bank as savings. Use one of the available expense tracker apps like
Household Account Book to plan and adjust your spending.

Purchase with cash

Avoid using credit or debit cards when doing your daily or weekly purchases. Instead use liquid cash
because it helps one in sticking to their budgets.

Set Financial goals

Financial goal setting helps someone to be intentional and focused in their spending. Ensure the
goals are smart though. Achieving a small goal like saving up to learn a new skill will motivate you to
set some bigger goals in the future.

SINGA CREDIT. Your trusted and reliable licensed moneylender in Singapore for your all your short term loan and personal loan needs.

content change

Planning Your Budget