How do I Draft a Personal Budget & Savings Plan?

Drafting a personal budget and savings plan helps you gain and maintain control of your finances and achieve your personal goals. A budget allows you to see how much money you bring in and how much you spend to cover expenses. A savings plan gives you a concrete outline for saving money and preparing yourself to weather unexpected events, such as a job loss. Creating a financial plan is not a one-time event but something you revisit and revise when your fortunes change.

Step 1

Write down your long-term and short-term financial goals. For example, creating an emergency fund is a short-term goal, while saving money for college is typically a long-term goal. You can make any necessary adjustments to your goals as you progress.

Step 2

Calculate your monthly take-home pay. This is the amount of money you receive in wages or salary after taxes and voluntary deductions are withheld. Locate this information on your pay stubs or bank statements if your paychecks are deposited directly into your bank account.

Step 3

Calculate your regular and irregular expenses. Regular expenses typically occur once a month and may include rent or mortgage, groceries, utilities, fuel and insurance premiums. Irregular expenses are costs you seldom incur. For example, a car registration fee and annual property taxes are considered irregular expenses, though the latter is often combined with mortgage payments.

Step 4

Track your daily spending. For example, daily spending can include buying a cup of coffee or breakfast each day before work. Calculating your daily spending habits gives you a more accurate view of your expenses.

Step 5

Subtract your expenses and daily spending from your take-home pay. You can use a spreadsheet or budgeting software to organize your income and expenses. The amount remaining after deducting expenses is your net income.

Step 6

Calculate the amount you can save after expenses are paid. Decide how often you want to contribute to your savings account. For example, you can save money from every paycheck or once a month.

Step 7

Adjust your expenses if necessary. Find ways to decrease spending if you feel you are not saving enough money.

Items you will need

  • Bills
  • Pay stubs

Tip

  • Offering services on the side or getting a part-time job can help you earn extra income to save more money.

Warning

  • Failing to periodically adjust your budget and savings plan can make it difficult to meet your financial goals.

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