6 Steps To Make A Monthly Budget



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6 Steps To Make A Monthly Budget

By xweienx

A sure way to achieve financial freedom is to live within your means and invest the rest. It may sound hard for some but can actually be easily done by having a monthly budget. If you're not sure how to start one or have never used a budget before, you're in luck. Here are 6 simple steps to start a simple budget for next month!

1. Total Up All Take-Home Income

First thing to do is to list down all your income. Here, we say take-home income (after all deductions) as that's the actual money that you get to use. Now, it's not just the salary from your main job, if you have any side gigs that give you some extra money each month, do include that too.


2. Total Up Fixed Expenses

Fixed expenses are any spending that are consistently paid each month. Some examples would be your mortgage and rent, utility bills, phone bills, food, and car payments. Strictly speaking, some of these expenses like utility bills and food are not fixed, but they don't differ too much from month to month, so just choose a number based on your past spending. Remember, it's always better to budget higher than lower. After listing these down, you would have a general idea on whether you're living within your means or not.


3. Convert Non-Monthly Expenses

These are spending that are either not calculated monthly or irregular. However, if you let them slip under your radar, they might put an unexpected dent into your bank account. First, expenses that occur annually, such as taxes, insurance premiums, or education fees. Then, you also have more irregular things such as holidays and birthday gifts. All you have to do is total up these expenses divide the number by 12 to get a "monthly" expense. You can then keep them in a separate account so that when the time comes, you are able to pay for it without affecting your usual budget.

(READ: Boost Your Savings With These High Yield Savings Accounts!)


4. Put Aside Money For Financial Goals

If you have a "travel fund" or are saving up for a car or house, then they are part of this step. Financial goals can be almost anything, as long as there is a clear goal in mind. You can have multiple goals at the same time too, just be sure to allocate them appropriately. You can have some money allocated to paying off debt, some into your "travel funds" and some into your "first home fund".

(READ: Best January Fixed Deposit Rates Up To 20.21%!)


5. Treat Yo-Self

Money won't love you if you don't love yourself, so you should always spend a little money on yourself. A simple idea would be allocating a fixed amount for discretionary spending, say a couple hundred ringgits a month. You can then use this for a nicer meal every once in a while or some shopping. If the money wasn't used or if there is any leftover money, it can be rolled over into the following month. That way, you'll have the motivation to save up the money for a few months in a row to spend on something a little more expensive. That's a good way to get into the habit of saving.


6. Calculate, Tweak, & Follow Your Budget

The last step is to put all this together, do some simple math, and figure out if your income can cover all expenses and savings. If it does not, you'll have to find another source of income or go through the list of expenses again and start cutting it down.

Of course, this will all just be writings on a paper if you don't follow the budget. Try to be quite strict on yourself and not give yourself too much leeway. It should only get easier and easier to follow the budget as the months past. Remember that this budget should only be for the month it is meant for and you should tweak your budget every month.


A budget can not only help you achieve your financial goals and financial freedom, it can also make you understand your life habits a little better. So, get some pen and paper, open up a spreadsheet, and start budgeting for next month!

(READ: 5 Ways To Start Your Journey To Financial Freedom)

*We are by no means certified financial planners and this article should be taken as knowledge sharing and not official financial advice.

money finance Budget monthly.budget planning financial.planning savings personal.finance self.help


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