How many of us really know what goes on with our money? For some people, our money is like an airplane black box. It’s a just a mystery to us. If we were to live successful lives we need to work on our finances and the first step in this journey is learning how to create a budget.
Yesterday I hosted a Live session with the super money coach Christeen Haddadin for the second time, where she shared with us a step-by-step guide to budgeting.

Highlights from the Live:

1. We need to change our mindset about having a personal budget, budgets will free us up, not limit us. They will put us in charge of our money instead of having our money run itself, which means we would run out of it needlessly.
2. Creating a budget is setting jobs for every Dinar we make. These jobs will help us cover our expenses on nonnegotiable needs, and also differentiate them from wants that we could do without.
3. We start a budget exercise by adding up our annual income including bonuses, and any planned returns we expect. In case it’s a non-fixed income, we look at last year and take 2 scenarios, the average monthly income and a more conservative one based on the income worst 3 months of that year.
4. We lay out our fixed monthly expenses like rent, car fuel, groceries, phone bill.
5. We lay out our quarterly/semiannual and annual expenses such as car license & insurance, family birthdays, tax, life insurance and so on, and let’s call these the annual payments
6. We save money every month to the above account of annual payments, so we would not be shocked when it’s our daughter’s birthday again, and we need to spend money on a little party for her. Example if we have car insurance of 500$ due in June we need to save 100$ every month from Jan-May to the annual payments account in order to be ready to seamlessly do the payment in June.
7. It takes time to build an emergency fund, and it’s up to us to decide how many months it should cover, 3, 6 or even 12 months. It depends on the stability of our income, the less stable, the higher the emergency fund needs to be.
8. We also talked about bad debt and good debt, where good debt is what you pay for assets like mortgage or land. Bad debt is what you pay for consumer loans like car loan or credit card interest rate. We need to check online debt calculator to see how much interest we are truly paying and look into increasing our monthly payments to reduce the interest amount that we are paying.
9. Last tip we discussed was about engaging with our money on a daily basis, especially since most of us are not using it in cash, by logging in to our bank applications and checking the status of our accounts.