How to budget for salary

Budgeting steps

To create a personal budget, you can follow the following steps:

Initial steps

• Income determination: This is done by knowing how much money a person gets each month, and if he has a variable income, he must create an average for it so that he can know how to spend the money.
• Determine fixed expenses: These are expenses that do not change from month to month, such as: house rent, car payments, electricity bill, bank loans, etc.
• Determine variable expenses: It includes groceries, eating out, clothing and entertainment, and is called variable because it can be reduced from month to month.

Steps during the month

• Comparing expenses with income: To create an ideal budget, outgoing expenses must match income; If a person spends every dollar of income in a specific place equals a dollar, then this is called a “zero dollar budget.” If the income does not match the expenses, the person needs to adjust the budget according to the salary. This is done by reducing variable expenses. If a person has additional money at the end of the month, he can put it in the savings section. If he reduces variable expenses significantly, but the income is not yet sufficient to meet fixed expenses, then he must find solutions to change fixed expenses. He can also look for additional work or employment. New better.
• Track expenses: This is to keep expenses under control and to prevent any excess expenses.
• Reset budget: A person may need to change the budget when unexpected expenses arise; He may need to take from clothing expenses, for example, to fix a car breakdown.
• Budget evaluation: This stage comes at the end of the month; So that the individual may change or change the budget according to what suits him.

Maintaining budget

To maintain the budget, you can follow the following tips:

• Focusing on the principle of prevention is better than cure; This is to save the costs of repairing faults.
• Saving of income is 5% or the rate that suits the individual’s situation, and the amount can be increased further as the person gains more experience in managing the budget.
• Practice rearranging funds from month to month to face any emergency circumstances or encounters, without the need to resort to a savings fund. For example, if someone wants to buy a new television, he should reduce eating outside the home.
• Ensure that expenses are always less than income, and this does not mean deprivation. Rather, it means managing money in the correct way so that money is put in the right place, and spending is reduced from something less important to something else more important.