Step 1. Work out your monthly income. If you want to know how much money you can spend, first of all you need to work out how much you earn. Calculate your income and base your budget on this.
Step 2. Determine your basic expenses. Figure out what your fixed expenses are every month. Safeguarding fixed expenses is also safeguarding the bare necessities in your life.
Step 3. Determine the expenses the vary each month. These include expenses that change based on usage like utilities, the expenses that change by month like bus tickets, as well as flexible expense like buying cosmetics. These costs may at times change quite dramatically.
Step 4. Set up an emergency fund. It is a good idea to create a safety net. Set aside a sum of money each month to make sure that you have enough to cover basic expenses or buy other items in case of emergency (e.g., if you become ill or become unemployed).
Step 5. Set criteria for your budget. After figuring out your income and expenses, set budget goals according to the situation you are in – e.g, How much money you want to save each month; how much you will spend on different things, etc.
Step 6. Keep track of your spending and review it monthly. Find a way that works for you that really keeps track of your expenses. You can use pencil and paper or a mobile application. Record your actual monthly expenses to make sure that spending does not surpass the budget for the month. You also need to make adjustments during the tracking and reviewing process to align your expenses with your budget.
Look for support. Share your budget with someone you trust. Ask them to help you review your progress each month. In order to stay committed and motivated, read about people who are in full control of their money and goals.