3 Steps on How to Create a Yearly Budget
Financial Literacy
0 POINTS
Complete the units, enroll in new courses, answer survey questions
By gaining points, you can win a personalised one on one coaching session
Complete the course to see how your learning has improved and gain 10 points
Answer the questions in each unit to generate your custom action plan and gain points
Collect points to be able to ask an expert any question you may have
| Module 1 | Financial Literacy |
| Unit 1 | Financial Literacy PreTest |
| Unit 2 | 5 Reasons Why You Need a Financial Plan |
| Unit 3 | 5 Common Sources of Income in a Household |
| Unit 4 | 3 Main Categories of Expenses in a Household |
| Unit 5 | 3 Steps on How to Create a Yearly Budget |
| Unit 6 | 4 Ways to Implement Good Budgeting |
| Unit 7 | 4 Essential Formal Financial Services that you Should Know About |
| Unit 8 | Financial Literacy PostTest |
Powered By WP Courseware
3 Steps on How to Create a Yearly Budget
Hi, we already know why a financial plan is needed but in this video, you will learn how to create it. Some people use the word budgeting when talking about creating a financial plan.
A Budget helps you keep track of your expenses to make sure that you are spending less than your income. It is advised to prepare a yearly budget to visualize how and where your money is going.
Here are 3 steps to help you start budgeting:
-
Add up your income (Net income): This is the first step in a budget plan. Add all kinds of income you are receiving in a year however, cut off any pay that you are not taking home. For example, if a percentage of your income is deducted automatically to pay taxes and health benefits then don’t include this specific amount of money in your total income. Any source of income should be added such as salaries, pensions and remittances. (Income already discussed in the previous course)
-
Estimate your expenses: This is the second step of a budget plan. Estimating expenses is not as easy as it may seem especially if you’re a kind of person whose expenses change dramatically. If so, get a rounded estimate by calculating an average for this significantly changing expense. Find the sum of your expected expenditures including both fixed and flexible expenses. (Expenses already discussed in the previous course)
-
Calculate the Difference: After calculating your Net Income and your Total Estimated Expenses, subtract the 2 amounts and get the difference. This result is the end product of your yearly budget plan. If your result is a (+ve) number, then you are spending less than your earnings. Congratulations, this is the amount of money you are gaining and you are a step towards building your wealth. But if your result is (-ve) number, then you are not spending within your means and the number you obtained is your loss. So move on to the next video to learn how to discipline yourself to follow your plan.