Manage your money better by developing a perfect budget

Knowing what you spend is part of planning the administration of your money, so if at the end of the month you ask yourself the question “what did I spend the money on?” Or if you recognize that you usually spend on impulse, the most convenient for your health Financial is to prepare a personal budget.

In this post, we will give you some tips to know how to budget your money and carry out your plans effectively.

Why make a budget?

A budget is a tool that helps quantify your income and better monitor what you spend, at the same time it serves to acquire the necessary behavior to comply with other plans.

Maybe making a budget may sound complicated or unnecessary in some cases; It may also happen that the first thing you think is that with a budget you must deprive yourself of the fun or the acquisition of things you want. In fact it is quite the opposite, the budget is an effective way to make your money yield.

How is a monthly budget made?

To start you can make a monthly budget so that you have a wider margin to manage your money, if you need it later you can prepare one per week or depending on the period in which you receive your income.

1. Establish your income and expenses

Identify all the income you receive, you must make a list of all monthly (your salary, independent work, income from income, alimony, among others.)

Then identify your expenses; you must include all those that are current, classifying them as fixed (rent, electricity, water, telephone, food, transportation, etc.) and variables (fun, payment of debts, clothing, cravings, planned vacations, etc.) write down all No matter how small, this will give more accuracy to your accounts.

2. Evaluate the result and create adjustments

The first thing you should consider is, the amount you obtained in the previous subtraction, you must ensure that it is positive; In any case, this is the part where you evaluate what you will do to improve the situation.

If your result contains red numbers, decide if some of your expenses need to be cut or eliminated altogether. It is advisable that the expenses do not exceed 90% of the income, to be able to save, at least, the remaining 10% each month.

3. Propose your balance correctly

Once you have considered the expenses to be reduced, you must have an excess balance in favor, which, as we had mentioned, you must ensure that it corresponds to at least 10% of your total income, although the ideal would be to correspond to 20 % or up to 30%.

To have a clearer idea of ​​how your budget should look, I recommend structuring it based on percentages similar to: 10% and maximum 15% for savings; between 20% and maximum 25% for payment of debts; and between 70% and minimum 60%, according to the percentages chosen in savings and debt, for all life and personal consumption needs.

4. Apply the new budget and constantly review it

Once you have identified the necessary adjustments to get a better use of your resources, prepare your budget and commit to fulfill it.

Don't forget that you should constantly check it; Even if you fail to follow it to the letter, always keep that in mind, as it will serve as a guide or reference. Also, remember that the budget must be flexible, that is, you can make the necessary adjustments or changes, always ensuring that the balance allocated to savings is positive.