You keep reading and hearing about financial freedom but where should you start? Well let’s start from the very beginning – a very good place to start. That’s by getting a clear picture of your current financial situation.

List down all the items you spend for on a monthly basis. Common items would include:

  • food and groceries

  • shelter (rent, mortgage, maintenance, property taxes etc.)

  • utilities (electricity, water, gas, etc)

  • transportation (gas, commute, car payments, maintenance, etc.)

  • education / tuituin fees

  • clothing

  • credit card bills

  • other loans

  • entertainment (eating out, going to the movies)

  • Miscellaneous (gifts for holidays and birthdays, etc.)

If you have expenses that you pay annually, divide those expenses by 12 so you get a monthly value.

Next is to write down all your sources of income. Most of us get our income from our monthly salaries. You may have investments earning you fixed interest or a side business to supplement your monthly salary. The idea is your total monthly expenses should not exceed your monthly income. In fact, what you’d want is for your expenses to be considerably less than your monthly income because that would mean you have savings!

But if that’s not the case for you, don’t worry. It’s not the end of the world. Your next step would be to prioritize your expenses. Identify which ones you can live without then make adjustments to your budget until you find a savings amount you can commit to. The key word being commit as you would only be cheating yourself if you can not stick to the budget you just created.

Congratulations you now know how to set your budget!

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