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Key Steps for Budgeting

I remember when I first started budgeting back in 2008. I started because at the end of 2007, I made a New Year resolution to put my spending in check. There were a few goals that I wanted to achieve and in order to do this I had to make a change. I had no idea about the steps for budgeting but I knew that I had to start somewhere.

The process actually started in January 2008, when I decided to make a note of every single thing that I spent. It was an exercise that I found to be very helpful and it was eye-opener. I did this for about four months before I actually started budgeting.

Budgeting is one of those personal finance basics that can truly regularize your spending habits. It’s hard to think that such a simple document can have such an impact. My budget is a simple Excel spreadsheet with each tab representing one month.

Each month I list my commitments in a column on the left and in the adjoining cells I state the amount that I have allocated to that particular item. These figures should total to my monthly income and reflect any expected expenses. The column next to that reflects actual spending. In recent months, I have been creating projections for upcoming months, to plan for upcoming purchased.

This budgeting process has allowed me to regularize my savings and spending as well. I know the minimum amount that I want to save, as well as my most important commitments. Whatever is left after these important items is then distributed among the other items on the budget.

Key Steps for Budgeting

If you’re thinking about starting your own budget, here are some key steps for budgeting that you can follow:
Make a list of your goals. These are the things that you want to achieve. They can be either short-term or long term, but they should be SMART (specific, measurable, attainable, realistic and timely.)

The key steps for budgeting are:

  1. Tracking your spending
  2. Making a list
  3. Following your budget
  4. Reevaluating your budget

Track Your Spending

Track your spending habits for at least a month. You have to make a note of everything that you spend. This basically gives you an idea about where your money is going and allows you to make conscious decisions to cut back, where possible.

Make a List

Make a list of your most important commitments and allocate funds to them first. (You can them into categories if you want). These are the items that you have to pay each month. Some examples are your mortgage, car note and utilities.

Follow Your Budget

Follow your budget. This will probably be the hardest thing that you will have to do. It’s okay to tweak your budget until it’s at a stage that you are comfortable with.


At the end of each month, re-evaluate your budget by comparing your actual spending to what was budgeted and make changes where necessary .People are often mistaken that a budget is meant to be created and followed religiously. You should always allow for some flexibility, but make sure that you are living within your means.