How to Create a Personal Budget: A Step-by-Step Guide for Beginners

Creating a personal budget is a process that can significantly improve your financial situation and help you achieve your long-term goals. Unlike complex financial plans that require detailed calculations, creating a simple personal budget is within everyone’s reach. Here are a few steps to get you started.

Determine your income

The first thing you need to do is figure out how much money you earn each month. Include all sources of income here. The main source of income for most people is a salary, but also consider any additional income such as freelancing, rent, financial aid, and so on. For example, if your salary after taxes is 50,000 rubles, and you earn another 5,000 rubles from part-time jobs, your total income will be 55,000 rubles per month.

Record your expenses

Now that you know how much you earn, it’s time to figure out where the money goes. Get into the habit of writing down all your expenses. This can be done in a notebook, an Excel spreadsheet, or using special financial tracking apps. Divide your expenses into several broad categories: fixed expenses, such as rent or mortgage, utilities, and loans; and variable expenses, such as food, transportation, entertainment, and shopping. Track your expenses for one to two months to get a complete picture. This will help you understand which categories are the most "heavy" on your budget and where you can cut back.

Create a spending plan

Based on your income and expenses, you can create a spending plan for the next month. Plan how much money you need for each category. For example, if rent is $20,000 and you usually spend $15,000 on food, allocate that amount in your budget. The remaining money can be distributed among other needs and savings. It is very important to remember about unexpected expenses and always have an emergency fund. This will help you avoid financial difficulties in emergency situations.

Follow your plan and adjust it

When creating a budget, it is important not only to create it, but also to strictly follow it. Constantly compare planned and actual expenses, record all expenses and analyze where you may have exceeded the budget. Sometimes reality may differ from plans, and this is normal. In this case, do not be afraid to adjust your budget. Perhaps some categories will require more or less funds. The ability to adapt to changes in life and budget is the key to long-term success.

Set aside savings

Do not forget about the importance of savings. Even if you have a small salary, try to put aside at least 10% of your income. This money can become your reserve in case of unforeseen circumstances or help you achieve large financial goals, such as buying an apartment or going on vacation.

Creating a personal budget is not a one-time event, but a process that requires constant attention and adjustments. Practice, monitor your finances and improve your skills. After some time, you will notice that managing cash flows has become much easier for you, and your financial situation is more stable and reliable.