Budgeting is the process of creating a plan to spend your money. He insists that creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. No one is born with money management skills. By the time we’re adults, we are expected to be able to manage our money effectively; however, most of us are not grounded on budgeting approaches. Voho Guy-Olivier outlines a resourceful and easy to understand ways of managing and planning your finance and expenditure through a well-prepared budget plan.

The first step is to start with your bills. Regardless of how much you earn or when you earn it, everybody has fixed expenses, such as the following: Mortgage payments or rent. Transportation (car payment, gasoline, train or bus pass, etc.) Utilities, Food, Insurance. If your recurring expenses don’t add up to the amount of your monthly income, your next step should be to save the receipts from every purchase that you make next month and use them as the basis for creating additional categories or adjusting the numbers in the existing categories.

Then next proceed with the variables such as the following: Birthdays/holidays, Gym membership, Pet care, Haircut, Clothes, Vacation, and Entertainment. These items are listed as variables for two reasons. The first reason is that these expenses vary from month to month. The second is that if you don’t have the money to cover these expenses, the expenses can be reduced or eliminated without too much difficulty.

Next step to creating a budget by Voho Guy-Olivier is to look at your monthly income. How much are you bringing in on your worst month? Compare that number to the amount that you are spending. Ideally, the income is larger than the output. If so, it’s time for a personal savings plan. In other words, don’t spend everything you earn – save some for yourself. If you are spending more than you are earning, it’s time to review your spending habits. When the expenditures are larger than the income, you have two choices: increase your income or cut the expenses.

Strategies to increase your income include getting a new higher paying job, getting a second job or finding a roommate to help you with expenses. Strategies to cut your expenses include eliminating impulse buys, which are a major expense for most people, and cutting out planned, but unnecessary, expenses. Keep in mind that simply making a few cuts can save you money every month. The concept is quite simple – if it’s not in your spending plan, don’t buy it.

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