Chapter 2: Key Components of a Personal Budget

There is no such fixed format for a budget. Since a budget is a plan that you make for yourself, you can choose the format that works best for you. Some people like to make a budget calendar. Some signup on a budget Bootcamp. Some take the old school way and use a pen and paper.

Let us look at some key components that every budget should have.

1. First of all, you need to understand your monthly income or the amount of money you can afford to spend over any given period.
2. Then it would be best if you tried to estimate the major categories in which you can divide these expenses.
3. Once you have done that, it is now time to trim your expenses and make sure they are in sync with your financial goals. This is how you create a budget.
4. Once you have this plan ready, it is all about reviewing and adjusting based on your needs until you finally find a plan that works best for your lifestyle while still helping you achieve your financial goals.

We will look at each of these components in detail and understand some essential budgeting tips and hacks that you can use along the way in the next chapter.