Personal finance guide
How to Create a Monthly Budget
A useful monthly budget is not a punishment. It is a plan for where your money should go before the month gets away from you.
1. Start with reliable income
Use your realistic take-home income for the month. If income varies, use a conservative figure rather than your best month.
2. List fixed costs
Write down recurring obligations such as housing, utilities, insurance, debt payments and subscriptions. These form the part of the month that is hardest to change quickly.
3. Set limits for flexible spending
Create categories for groceries, transport, dining, shopping and other spending that can change. A useful starting point is your own recent spending history rather than an arbitrary target.
4. Give savings a job
Choose one or more savings goals and decide how much you can contribute each month. A target date makes the required pace easier to understand.
5. Review the budget during the month
A budget works best when you check it before a category is exhausted. If one category is running high, you can adjust another category before the month ends.
6. Keep the system simple
You do not need dozens of categories. The best system is detailed enough to reveal useful patterns but simple enough that you will keep using it.
Using The Wealth Flow
The Wealth Flow brings transactions, budgets, recurring bills, savings goals, reports and cash-flow information into one place. It can help you compare actual spending with your limits and see how your choices affect the rest of the month.