FINANCIAL LITERACY

How to create a budget...

1. Determine Your Monthly Disposable Income

  • This will require your net income – which is essentially your take-home pay.

2. Analyze your expenses

  • Next, make a list of all your expenses. The best way to do this is by analyzing your monthly expenses for the past six months, or even a year.

3. Choose a budget system (We've listed 5 for your convenience)

4. Track your progress

  • Since your goal is to create extra room in your budget each month, this is the number you need to focus on. For example, let’s say your net income is $4,000 per month. In the first month, you reduce your expenses to $3,800. That leaves you with an extra $200 you can either put into a savings account or use to lower your debts.

5. Put your extra money towards its intended goals

  • As you begin to build a surplus in your budget, you may be tempted to spend it. DON'T DO THAT! Make sure the extra funds find their way into savings or extra debt payments, whichever you decide to prioritize.

6. Make adjustments in your budgets as needs change

  • As your financial situation improves for the better, you can modify your budget to get even better results. For example, once you’ve been using your budget for a while, you may find it easier to cut out certain expenses entirely. Eliminating cable TV, an unused gym membership, or increasing the deductible on an insurance policy to lower the monthly premium are possibilities.

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