Here is a simple seven step process on how to create a budget:
Determine your income. Write down all sources of income, including salary, bonuses and any other regular income.
Identify your expenses. Make a list of all your fixed expenses, such as rent or mortgage repayments, utilities and insurance. Also, list any variable expenses, such as groceries, entertainment and transportation.
Categorise your expenses. Group your expenses into categories, such as housing, transportation and entertainment. This will make it easier to see where your money is going.
Create a budget. Use your income and expense information to create a budget. Subtract your expenses from your income. This will equate to either a negative or positive number. If you end up having money left over, put it into another category, or even create a new category such as a buffer account. If you get a negative number, there is no need to worry; you simply just have to re-evaluate your expenses and cut back on a few things.
Track your spending. Keep track of your spending throughout the month to see how well you are sticking to your budget.
Adjust your budget as needed. If you find that you are overspending in certain areas, make adjustments to your budget. Cut back on discretionary spending or find ways to increase your income.
Review your progress. Review your budget at the end of each month to see how well you did and make adjustments for the next month.