{"id":5049,"date":"2021-05-12T15:32:39","date_gmt":"2021-05-12T14:32:39","guid":{"rendered":"https:\/\/cowrywise.com\/blog\/?p=5049"},"modified":"2025-10-29T08:55:19","modified_gmt":"2025-10-29T07:55:19","slug":"how-to-create-a-budget","status":"publish","type":"post","link":"https:\/\/cowrywise.com\/blog\/how-to-create-a-budget\/","title":{"rendered":"How to Create a Budget – 6 Easy Steps to Get you Started"},"content":{"rendered":"\n

How to create a budget:<\/h2>\n\n\n\n
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  1. Create a budget spreadsheet or use a budgeting app<\/li>\n\n\n\n
  2. List and calculate all your (net) income <\/li>\n\n\n\n
  3. List and calculate estimated expenses <\/li>\n\n\n\n
  4. Fill in your monthly expense<\/li>\n\n\n\n
  5. Evaluate your spending habits<\/li>\n\n\n\n
  6. Set goals that you can track <\/li>\n<\/ol>\n\n\n\n

    1. Create a budget spreadsheet or use a budgeting app<\/h3>\n\n\n\n

    I\u2019m tempted to type \u201cduh<\/em>\u201d because this is an obvious step right? There\u2019s no way to have a budget without actually creating \u201cthe place\u201d where you\u2019ll detail your income and expenses. Choose a tool that\u2019s easy to use and accessible. Some people run from the very idea of spreadsheets, but a tool with rows and columns to arrange data is just fine. I\u2019ll advise you not to use a pen and paper for this because the day it goes missing, you\u2019ll have to start over. Better still, we have created a simple workbook you can use for your budgeting needs. <\/p>\n\n\n\n

    Click here<\/a> to download the Budgeting Workbook.<\/h2>\n\n\n\n

    2. List and calculate all your (net) income <\/h3>\n\n\n\n

    If you\u2019re a 9 to 5er, your salary is one income stream to take down. However, do not stop there. List EVERYWHERE  you\u2019ve made money from in the past few months – side business, monthly vex money<\/em> from parents (assuming you\u2019re a trust fund<\/a> kid), etc. However, if you earn only from your salary, then that\u2019s fine, state just that.<\/p>\n\n\n\n

    3. List and calculate estimated expenses <\/h3>\n\n\n\n

    Your budget should include EVERYTHING you remember that you normally spend money on. Leave nothing out, not even what you spend N5 on (if there\u2019s any such item available in this x3 economy.)<\/p>\n\n\n\n

    After making the list, put in an estimate of what you think you spend on each item. This is to determine the average monthly costs for each expense.<\/p>\n\n\n\n

    Calculate the difference between your income and expenditure<\/h4>\n\n\n\n

    This is a crucial step in creating a budget – calculating the difference between your income and expenditure. If when you\u2019re done, your expenses are way less than your income, then you\u2019re at a good stop. When I created my first budget, my estimated expenses were higher than my income so I knew I had to adjust. Remember, you want to increase the gap between your expenses and your income. The wider the gap, the more funds you’ll have left to save or invest.<\/p>\n\n\n\n

    \"Income<\/figure>\n\n\n\n

    Separate your expenses into fixed and discretionary categories<\/h4>\n\n\n\n

    Fixed expenses will include things like transportation, debt, feeding, rent, light bill, etc. These are essentials. Discretionary expenses will include things that are important to you but that are not as important as your fixed expenses. For example, this can include monthly movie dates, travel plans, etc and they can be delayed. However, delaying your feeding, debt repayment (if any), rent, or light bills will ultimately end in tears… <\/p>\n\n\n\n

    \"\"<\/a><\/figure>\n\n\n\n

    4. Fill in your monthly expense<\/h3>\n\n\n\n

    This is different from the previous point where you estimate what you used to spend on an item. Here, you have to fill in every penny spent monthly in your budget. The table below is an example. You can download the Budgeting Workbook here<\/a>.<\/p>\n\n\n\n

    <\/p>\n\n\n\n

    Expense<\/strong><\/td>Amount (N)<\/strong><\/td><\/tr>
    Transportation to and fro the office<\/td>25,000<\/td><\/tr>
    Feeding<\/td>50,000<\/td><\/tr>
    Data subscription<\/td>15,000<\/td><\/tr>
    Urgent 2K to younger bro<\/td>2,000<\/td><\/tr>
    Total<\/strong><\/td>92,000<\/strong><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    I\u2019ve found that what works best is to fill this in daily, or at the latest early the next day. This is because there\u2019s only so much the brain can take. Documenting this daily will ensure you don\u2019t forget any item, which will in turn give you accurate numbers at the end of the week or month – depending on the timeframe you want to follow. Also, divide these expenses into cash and bank debits for even more accuracy.<\/p>\n\n\n\n

    5. Evaluate your spending habits<\/h3>\n\n\n\n

    Now that you\u2019re filling in your daily expenses, you need to understand that that\u2019s only a means to an end. The end here is to improve your financial habits. After one week or one month, evaluate your budget and spending habits. What have you spent the most on? Why? Were there many impulse purchases on your expense list? <\/p>\n\n\n\n

    Evaluate! Evaluate! Evaluate! After this, you can then move on to the next and final step in budgeting. <\/p>\n\n\n\n

    6. Set goals that you can track <\/h3>\n\n\n\n

    Now that you\u2019ve evaluated your spending habits and rated yourself Excellent, Good, Average or Poor (does this remind you of Primary School?) You then need to decide on what to double down on and what to stop. Set specific goals and keep track of them. <\/p>\n\n\n\n

    For example, a goal of yours might be to reduce how much you spend on new clothes each month (if you spend a lot) and increase how much you give to causes that matter to you. In a few months, you can track if you\u2019ve stuck to the goals you set after evaluating your spending habits. <\/p>\n\n\n

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    <\/span>Guides<\/span><\/a><\/div>\n

    How To Make Money On Facebook<\/a><\/h3>\n
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    <\/div>\n <\/a>\n <\/div>\n <\/div>\n \n
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    <\/span>Guides<\/span><\/a><\/span>Money Tips<\/span><\/a><\/div>\n

    5 Takeaways from Richard Templar's "Rules of Money"<\/a><\/h3>\n
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    <\/div>\n <\/a>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n <\/div>\n\n\n\n

    What information do you need to create a budget?<\/h2>\n\n\n\n