Next, you should allocate categories in your budget that align with your financial goals and income . Income is inflows of cash to an individual or household. The third step to developing a budget is to select a budgeting system. A physical budget involves using envelopes, folders, or containers to hold the money or slips of paper that represent the amounts allocated for spending categories. This system allows you to actually see where your money goes.
Financial advisers recommend a written budget .
A written budget can be kept on notebook paper or in a specialized budgeting book. A common budget format is a spreadsheet that has several monthly columns for comparing budgeting and actual amounts for various expenses. See the monthly budget worksheet to open and print a form that you can use to create your budget. You can also use a computerized budgeting system. These are software programs that allow you to create a budget by entering what you plan to spend on each category.