Self Mentor

-1. Sketching Out a Household Budget

The household budget determines how much you are left with, which in turn determines whether you can start investing. To prepare this budget, you will first need to job down a plan on a piece of paper, which includes your sources of income, which could be a salary, a rental income, interests, dividends, etc.

The next logical step in planning the household budget would be the expenses. These could range anything from groceries, fuel bills, and electric bills, and any other such expenses you have got. To get a better understanding of the budget, you can break down your income into monthly expenditures.

Once you have the basic structure of the budget, you will then need to check and identify your spending patterns over a few months. This will tell you where you can cut down on your spending so you can save more for your investments. Using this plan and the spending pattern, you can then move on to planning your investments.