Needs, wants and savings

Debt payments may look confusing when you add it to the savings column. But the easiest way to build up a savings balance is not to have your money go toward debt. Once your debt is paid off, you can increase the savings.

Play around with your monthly budget to see where you can reduce your monthly spending:

• You could contact your internet company to get a discount.
• You can clip coupons and use rebate apps to spend less on your monthly groceries.
• You could set aside less for medical expenses if you have an emergency fund.

1. Gather Some Financial Information: gather a detailed list of your income and expenses.
2. Select a Budgeting Method: figure out how you’ll budget your money to meet your most pressing financial goals.
3. Create Your Budget: tally up all your expenses and income to see where you stand and allocate expenses.
4. Execute Your Plan: you can use a notebook, pen and paper, a spreadsheet or an online software.
5. Reward Yourself: you can work a small percentage into your budget to treat yourself each month.

This method suggests that you allocate 70 percent of your income to expenses, 20 percent to savings, and the remaining 10 percent to debt.

70:20:10 may work for someone with a healthy emergency fund and minimal debt.

The Envelope system is a way to track your variable expenses like food, entertainment, and drinks.

This method, preferably used weekly, allocates a certain amount in each category in labeled envelopes (food, drinks, movies, etc.). Once the envelope is empty, you are done spending in that category.

The principles that make a good budget, something you can stick to:

• Being Realistic: Being too strict is a recipe for failure.
• Making Adjustments: A budget is not set in stone, but a fluid thing.
• A Team Sport: If you live with a partner or spouse, you have to agree mutually on how to budget the financials.
• Expect the Unexpected: Keep an emergency fund, ideally 3-6 months of necessary expenses.
• Budgeting the Expected: Certain upcoming expenses need to be budgeted in advance, like property tax, holiday shopping, etc.

1. Determine how much you make on any given month.
2. List your bills: Once you determine how much money you'll make this month,  figure out how much money you need to spend next month.
3. Compare and contrast:  Once you see your monthly income and your monthly bills on paper, a clear picture of how much money is left over emerges.
4. Spend all of your money on paper: decide where that money will serve you best.
5. Track your spending.
6.  Make adjustments to get it right.

• Create a full inventory of expenses in front of you: Categorize them into fixed and variable; urgent and non-urgent; necessities and luxury; avoidable and unavoidable.
• You can create a hierarchy of needs and decide which one’s to address first. It’s all about prioritizing. 
• Accept that you have limited resources and unlimited wants. But you have to manage your resources. The sooner you accept this fact, the better you can control your impulses towards avoidable expenditures.

It’s a statement wherein you can jot down your assets and liabilities.

• Pull together your bank statements and other proofs of the liabilities
• List down your assets like the bank balance, all investments, home value, and value of other assets.
• Take a sum of all the assets to arrive at the total value of your assets.
• List down your liabilities the (car loan, home loan, credit card balances etc.)
• The sum of all the liabilities will show the value of the money you owe.
• When you subtract the value of liabilities from assets, you get your Net Worth.
  

1. Gather every financial statement you can (bank statements, investment accounts, recent utility bills).
2. Record all of your sources of income.
3. Create a list of monthly expenses.
4. Break expenses into 2 categories: fixed and variable.
5. Total your monthly income and monthly expenses.
6. Make adjustments to expenses: If you have accurately identified and listed all of your expenses, the ultimate goal would be to have your income and expense columns to be equal.