By Violeta Saint-Hilaire
To create a realistic personal budget, you should record all your financial transactions and those of your family for 30 days. You can use an app or simply write down each income and each fixed or recurring expense in a notebook, such as housing, food, utilities, transportation, and medications—those essential expenses for your daily life. Also, note down variable expenses—the occasional purchases that don't happen every day and that, if skipped, won't disrupt your routine. Once you have these amounts, separate them, add them up, and you'll have a more accurate picture of your monthly spending and how much money you need to live comfortably.
What else can you do with this information? Besides preparing your realistic budget, you'll be able to identify where you make excessive and unnecessary purchases. Here's your chance to reduce them by 10% to 30% in some categories, such as food. It's proven that you can reduce food by up to 30% by planning your meals and then creating a grocery list. This will help you minimize waste.
These excessive expenses are what have "hijacked" your well-being, and you may not have noticed because you don't keep a budget; within these extra expenses lies the money you could allocate to savings and distribute to investments, create an emergency fund, enjoy guilt-free fun, plan your dream vacations, among other things.
Three important aspects to consider when creating your budget:
1. Create a column detailing all the lines that make up the “budget”
.2. Another column with what was “executed”, that is, what was actually spent or received; this will help you to make the necessary adjustments, so that in a few months you will have an increasingly realistic budget.
3. Closing the month means subtracting expenses from income to obtain the final balance for that month; this way you will know if you had a surplus or a shortfall, and your next month will start with the previous balance.
If you have money left over, deposit it in savings to allocate it to the corresponding line item later; and if you are short or have overdrawn your account, be cautious this new month, trying to reduce expenses so that you can close the month without a loss.
I don't know of any other method for managing personal finances efficiently; THERE IS NO FINANCIAL WELL-BEING WITHOUT A BUDGET; it would be like setting sail at sea WITHOUT A ROUTE CHART, you won't get anywhere.
"A budget is telling your money where to go instead of asking yourself where it went." -John Maxwell-
The author is a real estate advisor and financial wellness coach. She holds a degree in Business Administration and a Master's degree in Strategic Business Management. She has been writing about personal finance for several years in the Listín Diario newspaper and through online chat platforms.
