5 steps to creating a tight budget
A tight budget helps create an expense plan that is appropriate for all income levels, and provides surplus funds for emergencies. Here are five steps to creating a budget:
* Setting goals: Clear goals help maintain financial discipline.
* Recording of revenues and expenditures: setting a schedule in which all revenues and expenditures are recorded on a monthly basis.
Classification of essential and non-essential items: For the budget to be effective, expenditures must be classified between essential and non-core.
* Set the budget: After completing the financial statements, it is time to prepare the budget. Setting the priority of expenditures will help exclude some of them, and keep them within the limits of income.
* Maintaining financial discipline: Financial safety is achieved only upon adherence to the specified steps, to achieve financial goals, and to take care in monitoring all revenues and expenditures.