1. Find out your expenses
In modern world people using a banks which provides usually a mobile banking or online banking. Every transaction will be logged into your bank. Take a 1 month statement or if your mobile banking allow use summary overview by category. Write out a high expenses and frequent expenses. Then you should understand for yourself:
- What expenses are your mandatory? (Bills, Needs, Transfers)
- What expenses are just emotional or this-second-buy (Wants)
2. Create your first budget!
First of thinking about your goals and wants we want get into stable state and see a clear picture of where we stand now. When you know your numbers, create a spreadsheet with:
- Income
- Bills (rent/mortgage, insurance, electricity&gas)
- Savings
- Needs (food, fuel, home)
- Wants (entertainment, dining out, etc.)
You can have another names for categories or more of them, the main point here that any category subtract your income and in the end you should have these number:
- Leftover = Income - Expense
- Total = All Categories Sum
Your first budget is ready to go!
Here is my spreadsheet example: link
3. Know your limits
Leftover = Spend limit
Once you know your leftover it means you put aside money for all things that mandatory to be paid, and leftover its what is your left money to spend on what you like, so you should set it a spend target or put this money on your main spending account and try to not go over the line.
4. Start with budget and learn on mistakes
Once you have your budget, it's can be hard to integrate it right away into your life but don't be afraid, there are always be mistakes but it will teach you how to adjust your budget. Don't be worry, everyone starts like you!
Read more: How to use a budget?