Budget concept
Salary budget – A budget is defined as an estimate of revenues and expenses over a specified period of time in the future and is usually compiled and reassessed on a periodic basis. Budgets can be made for a person, a group of people, a business budget, a government budget, or anything else that spends money. that the budget is in a state of surplus, and in this case it is known as the “budget surplus,” which means that the revenues are greater than the expenditures; or the budget may be in a state of balance, and it is known as the “balanced budget,” which means that the revenues are expected to equal the expenditures; or the “deficit budget,” which means that the expenditures will exceed the revenues.
How to make a salary budget
Many wonder how to make a salary budget, and to make a salary budget, some of the following steps must be followed:
Collect your stock.
Before you begin, you must gather all of your financial data, including:
- Bank statements
- Investment accounts
- Recent utility bills
- Credit card bills
- Receipts from the last three months
- Mortgages or car loans
Organizing your finances is a great way to help you save time and money, and you are likely to discover areas where you can save some money, such as by canceling an unused subscription, refinancing a loan, or getting a better deal on insurance.
Calculate your income.
If your income is in the form of a regular salary, from which taxes are deducted automatically, and then you get a net income amount, that is fine. If you have variable income, for example, from a seasonal or freelance job, consider using the income from the least profitable month in the last year as your base income when preparing your budget.
Create a list of monthly expenses.
Use your bank statements, receipts, and credit card statements from the past three months to determine everything that is spent and write a list of all expenses that are expected to be in one month. This list could include:
- Mortgage or rent payments
- Car installments
- Insurance
- Grocery stores
- Public utility
- Entertainment
- Personal care
- Eating out
- Baby care
- Transportation fees
- Travel
Determine fixed and variable expenses.
Fixed expenses are those mandatory expenses that pay the same amount each time, such as mortgage or rent payments, car payments, and specific Internet service. Fixed expenses include the amount and any other basic expenses that tend to stay the same from month to month. Variable expenses are expenses that will change from month to month, such as:
- Grocery stores
- Benzene
- Entertainment
- Eating out
- Gifts
Salary budget – Start assigning a spend value to each category, starting with fixed expenses. Next, estimate how much you’ll need to spend per month on variable expenses. If you’re not sure how much you’ll spend in each category, check your last two or three months on a credit card. or bank transactions for a rough estimate.
[lyte id=’IXsb3aoXbVk’ /]
Total monthly income and expenses
If your income is higher than your expenses, you are off to a good start, and this extra money means that you can put money towards areas that you need in your budget, such as retirement savings or paying off debt. If your expenses are higher than your income, this means that you are overspending and need to make some changes.
Tip: If you have more income than expenses, consider adopting the “50-30-20” budgeting philosophy. In a 50-30-20 budget, “needs” or basic expenses should make up half of your budget, desires should make up another 30%, and savings and debt payments should make up the final 20% of your budget.
Make adjustments to expenses.
If you are in a situation where expenses are higher than income, find some of your variable expenses that you can cut, such as finding places that can reduce your spending, such as reducing eating out, or canceling a certain thing or category, such as a lounge membership. If you have large debts and reducing your variable expenses is difficult or not enough, you may need to reduce your fixed expenses and increase your income to balance your salary budget .
Read also: The most important details of success in entrepreneurship
