It is very common that in a few months it happens that expenses get out of control. Sometimes we don’t have planned how much we can spend and sometimes the expenses can get out of hand. It is for situations like this that making a personal budget could give us security and peace of mind about our economic position. However, to make one that is efficient it is necessary to know and put into it the important factors. According to a national survey, the most common method for making a personal budget is guideline 5 0-20-30, since it allows for an orderly distribution of income. The numbers that make up the method name are due to the following percentages: 

• 50 percent of the income must be directed to essential expenses such as electricity and water services, food, transportation, education, medical expenses, etc.
• 20 percent of income should be used for financial goals such as savings, investments, and expenses to earn debt.
• 30 percent of the remaining income is those that must be applied in flexible expenses, that is, everything that is bought but is not really necessary, such as movies, restaurants and travel.
• Taking these percentages into account, a template has to be made to calculate an estimate of the income and expenses that one has per month, in order to keep a more organized record and thus avoid mismanagement of expenses.

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Savings and investments

Below the income already noted in the ‘Description’ column, the factors that generate an outflow of money for savings and investments must also be noted. Next to it, in the estimated value, the same is done as with the income and the amount expected to be paid in the month for those savings and investments is put. In the same description column, all those money outflows related to debt payments, such as mortgages and loans, must also be entered. 

Expenses 

It is recommended that both debts and savings are a little more separated from expenses , since this way they can maintain the habit of saving and paying the debt. In this way, monthly spending, which is the central part of the budget, will be dealt with in a more orderly manner. As with income, expenses must also be calculated with the estimated value and the actual value. You should budget for unexpected problems too, such as your car breaking down or insurance for certain issues, things such as hurricane insurance claims are important and you should always ensure that you are covered.

Finally, an evaluation is carried out where income is compared with expenses. This will allow us to immediately detect if there is something that does not fit with the initial planning. The key to all this is that when the behavior of money has been seen, it can be financed in a better way. If we make this template we will not only be able to visualize our expenses in a better way, but we will also be able to improve personal finances, and pay all the bills, leaving us the freedom to use the rest of the money for fun and other personal interests.