The Easy Way to Create a Budget For Any Income | Sabrina Ana Maria | Skillshare

The Easy Way to Create a Budget For Any Income

Sabrina Ana Maria, Your Personal Finance Motivator!

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10 Lessons (10m)
    • 1. Introduction

      0:45
    • 2. Step 1: Expense Categories

      0:41
    • 3. Step 2: Fixed Expenses

      0:40
    • 4. Step 3: Income

      0:53
    • 5. Step 4: Variable Expenses

      2:11
    • 6. Step 5: Extra Income

      1:17
    • 7. Step 6: Track Expenses

      1:04
    • 8. Step 7: Update

      1:35
    • 9. Conclusion

      0:49
    • 10. Project Info

      0:20

About This Class

Today we're going to be talking about how to create a successful budget and how to follow through with it in 7 easy steps. Hope you enjoy!

Transcripts

1. Introduction: Hi, everyone. My name is Sabrina and say we're going to be going through how to make a budget. If you haven't seen any of my previous classes yet feel free to take them. I'm a certified financial education instructor, which just means I'm helping people become financially illiterate. We're not really going to. Deep into investments were not going to deep into anything that's super complicated. We're just going with the basics of budgeting, how to handle your money and the psychology behind what we're going to be making decisions on. They were going to be going through how to make a budget, and this is the exact steps that I take and I tell my clients to take because it's not complicated. It really focuses on what you want to achieve, and I really think I'll be in the long run, so let's just get into it 2. Step 1: Expense Categories: Step one is to determine all of your expense categories, anything that you are putting your money into. So that includes, you know, grocery shopping, going out, Teoh, that includes everything, including your goals. So you have to incorporate savings into those things investments, anything that you're looking forward to, that you're gonna put money into that has to be calculated into that. Now, we're not talking about numbers, that you're just thinking of the categories. So just get a sheet of paper and think of all the things that you spend money on. If you need to print out a previous bank statement just to see what you really do, spend money on, feel free. But right now we're just coming up with all of the categories. 3. Step 2: Fixed Expenses: now the next step, now they have all those categories is to figure out which ones are fixed. So anything like rent is a fixed expense. Because it doesn't change month to month your utilities, you can generally put a you know, an approximate number on there. Those are things that aren't changing. Those are things that one month you will pay $100. In the next month, you'll pay $5. They're generally around the same, so anything that's a want. I want you to leave completely blank. If it is a fixed expense, then put it on there and make sure that you have a general amount, even if it's an average. But if it's a need and it's a fix expense, you need to write that down. 4. Step 3: Income: The third step is we're gonna leave all those wants and flexible expenses blank. But for right now, we have to calculate your income. Now, for some people, this is a fixed amount. You have saved him out every week, every two weeks. However you get paid. But for some people, especially nowadays, you know you have all these side gigs and you know your income is very, very flexible. What I would suggest is that go with a conservative amount, meaning that your Lobel in your income that is the most important thing you could do when you have flexible income. Because if you have a good month and you get $1000 let's say one month you can't assume that you're gonna have a good month every month. So to budget based on your best a month isn't the most financially responsible thing to do so. Like I said, if you have a flexible income that make sure that you are lowballing it, we're being conservative, and then we'll work from there 5. Step 4: Variable Expenses: So the fourth step is that we're going to fill in all those blank variable expenses because the fixed expenses were fixed. We had to list those numbers down there. But for flexible expenses, like going, shopping or even grocery shopping because that is a flexible expense. We're gonna start feeling that. And now, now, keep in mind that your total income has to equal your expenses. So when you're filling in the rest of your expenses, they can't go over the amount that you have coming in every month. Now, if all the expenses that you're adding up flexible and fixed are more than your income, you're going to have to cut down somewhere the fixed you can't really cut down, which is why I put those in first. But those flexible expenses that you just put in is where you're really gonna have to dig deeper into and find some wiggle room. Now I want to play with that a little bit and see what you're fits your lifestyle. Some people might want to lower their travel and increase their shopping and keep that stable. Or you might do the opposite you rather so money on travel and save a little bit on shopping. Whatever you think that you could make sacrifices for this is really we're gonna have to do it now. Don't forget, I mentioned that savings should be one of the categories that you have. Try not to compromise on savings if you can compromise on something that is a want, like shopping or travel Like I said, I highly highly recommend that you cut your expenses there as opposed to cutting your expenses on savings. Is your gun appreciate in the long run? Now, on the other side of that, if you add up all of your expenses and they're actually under the amount of income that you have, then what I want you to do is put that into savings. Now, you might want to put that extra money into traveling or shopping, because now you think OK have actual money can definitely budget that in, But something you really have to consider with this is that you might have an emergency. If you don't have an emergency fund built up, then I would definitely put the extra money towards savings. If you do have a solid emergency fund, then of course I am totally about living your best life and putting as much money as you want towards the things that you love to dio. But if you don't have that backup savings, I would recommend that any extra money you have goes into savings. 6. Step 5: Extra Income: Now that we have your budget down, your income equals your expenses and we're all set to go. You need to think about in the future when you're actually carrying out this budget and spending your money, Where will you put any extra money? For example, if you have a $100 grocery budget or something and you end up spending 80 what you gonna do with that? $20? You have to have these plans ahead of time before you spend it recklessly in another category. You also have to plan for any extra income you might make that month. Whether your grandma give you a couple extra bucks that month is a gift, or if you do have a flexible income and you happen to have a really good month, you need to know what to do with that money. Because the problem is when you come across so much money and you don't have a plan for you just end up spending it on something, and you really forget about your original financial goals that you had to make sure you have a plan for your extra money will go personally when I get extra money I have my own set percentage of where I'm putting it, so I'll put the majority of my savings. I have multiple different savings accounts for different saving schools, and I allocate that way now to be complaining, honest, There is a percentage of my extra income that goes towards things I want and things to treat myself, which is totally fine. But the most important thing is that you set that plan ahead of time. So you don't spend all of the money on things that you want, that you haven't allocated percentage for that. 7. Step 6: Track Expenses: no step Number six is to follow your budget through. So you're gonna have to get some sort of way to track this, whether you personally like writing that down on a piece of paper. Or I like to use the every dollar up because it's a lot easier putting all of your transactions, and you can really keep track of how much you're over and how much you're under answering category now, as you're going through the month just kind of monitor, where you're spending more money and where you're spending less money. First of all, don't be hard on yourself if you're over budget on certain aspects, because it's really hard to put a number of things. If you haven't, you know, seriously looked through what you've spent previously, so just make sure that you update accordingly at the end of the month, just analyzed. Where did I spend less on Where did I spend one? How can I re adjust these numbers? Your budget is ever changing, but you just have to know the steps to create one, because you're gonna be updating and re creating it every month, every couple months, when situations change your incomes in your income increases your expenses decrease. So don't be hard on yourself. When it comes to a budget, just make sure you're tracking it, so you know exactly what's happening with your money. 8. Step 7: Update: now the last step into having a successful budget is updated accordingly. Like I said, you might have some seasonal expenses at the end of the year for a holiday season. Maybe school expenses. Maybe summer is, ah, whole budget for you. For me, it's fall. I go crazy and the fall. It's my favorite season. I love going apple, picking a love getting apple cider. So I personally have my own fall budget because I really love to live my best life in the fall. So it was important that you're updating these accordingly every month, every couple of months, because things will change. Your needs will change about the month. Maybe in December, January February. We're gonna need to buy what you're close. All those things you really need to factor in an alternative to check in your budget every single month is toe have a yearly budget, which is what I like to do. There's a YouTube account called One Big Happy Life. If you're interested, it's all about, you know, budgeting. And you know, it's a very family oriented type of YouTube channel that I found out about this yearly budget from, and it has changed the game for me. So it doesn't have to be so strict. But at least it gives you a rough draft of We're gonna be spending your money throughout the year. So, for example, for me, there certain times of the year where I get three paychecks a month instead of two bi weekly once because there just happens to be an extra Friday in the month. You can see that from far out. I can look at that in January and know that in May November I'm gonna be getting three paychecks. And that way I can budget and allocate my money accordingly. Just so have a good idea where I'm heading. And then as time gets closer to that month, I can adjust a little bit. But at least I have the majority of my budget over you fill out 9. Conclusion: So that is it for how I create a successful budget. This has worked for me for a very, very long time, and I really think that it prioritizes the needs. But it also lets you have some space for the wants, because the other day you can't just budget for the things that you definitely need. You have to be aware of the fact that you're going to spend money on things you like. As long as you're aware of it and you're planning for it. There's no harm done, and you can live your best life and still be frugal. Thank you so much for clicking and watching this course. I really appreciate it. I hope that you'll learn something from this. And if you have any questions at all, please leave a comment below. I really would appreciate if you had a review. And if you have any suggestions on future videos or courses, please let me know I love personal finance, and if there's anything I could do tell you, please let me know and that's it. I will see you next. Video 10. Project Info: so the project for this course will just be to upload your budget. So if that's on paper and take photo, that's on word. That's an excel. Fill your budget to the best of your possible ability, and I'd love to take a look at it and see where I can help you succeed and, you know, have a little bit of a fine tuned budget if you need, so feel free to upload those to be reviewed and be happy.