In a time of widespread uncertainty and fear, it’s not surprising that many families are going through financial strain. Whether your family has experienced job loss, reduced hours, or additional expenses during this unprecedented time, there is still one thing that is in your control when it comes to personal finance: creating (and following) a written budget.

Arguably one of the most vital parts of personal finance is the creation and maintenance of a written budget. While it may seem intimidating at first, this task, when broken down properly, becomes fairly easy to follow.

The first component of a written budget is just that—it must be written. The use of pencil and paper in lieu of auto-deposits and digital money tracking serves a few worthy purposes, including the painting of a wholly accurate picture of an entire financial situation rather than parts of it being scattered across different digital platforms. It also forces you to physically sit down and devote time, energy, and focus to your finances. Once you have sat down and prepared to make a budget, there are a number of fairly simple steps to follow in order to complete it. 

First, you must figure out and write down your total income per pay period after tax. This includes any and all income, including side jobs and the income of a partner or spouse (if shared finances are part of the equation). Many of the following steps will be based on this number, so it’s important that it be as accurate as possible. 

Second, you must list every expense foreseen in the upcoming pay period. Consider regularly recurring bills such as housing, water, and electricity. Include other expenses such as gas, food/grocery, and household items. After the essentials are met, consider “surprise” expenses and try to budget for them as accurately as possible; in doing this, consider upcoming birthdays or other small expenses. While this may seem counterproductive, ensure that you allocate for yourself a certain, defined amount of “fun” money. For most people, wasteful spending is an issue only because it isn’t capped. Setting money aside specifically for this purpose allows more control over this type of spending and eliminates the risk of blowing a bit too much cash.

Finally, subtract each of these expenses from the number written down in the first step, or the total income. After this has been done, put all leftover funds toward your current financial goal—depending on your situation, this could be an emergency fund, college savings account, or retirement savings. When all of this is said and done, zero dollars should be left—every cent should be sorted and accounted for.

This is the basic outline of a zero-based budget. Once broken down, this process becomes easier and, consequently, more usable in everyday life. 

By knowing where every last dollar of your greatest wealth-building asset—your income—goes, your financial literacy improves a great deal, better preparing you to take control of your money, regardless of the circumstance.

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