How to build a budget?
Having a budget is the difference between being financially responsible
and flirting with financial payroll.
Debra has made a wise decision
to create a budget, to organise her finance
and prepare for any financial emergencies.
Her first step is to determine her net income.
The net income is how much money Debra has left over
at the end of the month.
This amount is found by using the following equation:
total revenue minus total expenses equals net income.
Debra’s revenue is
all of the money that she makes in a month.
This includes income sources like wages, bonuses and investment income.
Usually these sources are consistent on a monthly basis.
Debra’s expenses include all of her monthly bills,
which are broken down into two categories:
fixed expenses and variable expenses.
Fixed expenses are the payments for bills
that are the same every month.
比如房贷 保险 车贷
Such as mortgage, insurance, car loans,
cell phone and cable bills.
Debra’s variable expenses are the bills with different totals each month.
比如娱乐 食品 汽油和公共事业费
Such as entertainment, groceries, gas and utilities.
Debra can now deduct her fixed and variable expenses from her revenue.
If her revenue is higher than her expenses,
she has a net income.
Debra can use her net income to build her emergency saving account
or invest in her retirement.
If her expenses are greater than her revenue,
Debra has a net loss.
Debra must reduce her variable expenses to balance her budget
or she will need to find a way to reduce her fixed cost,
such as downsizing her home.
By tracking your total revenue and expenses,
you can build a budget that quickly determines
if you have money to invest or save,
or if you’re living beyond your means.