Budgeting made simple: Your first step toward financial freedom

Know where your money goes to, first

The first step to budgeting is having a clear picture of your expenditure. For one month, trace your income and expenses: everything from rent and groceries to coffee runs and subscriptions. This exercise will help you find where your money actually goes versus where you think it does. When you can see where the money is going, you naturally start to notice where you might cut back or make better choices.

Allocate your earnings in a well-organized manner

A great way to do this might be to consider the 50-30-20 rule: 50 percent of your income goes toward needs, 30 percent toward wants, and 20 percent toward savings and/or debt. Your "needs" include things like rent, utilities, groceries, and other basic needs. The "wants" would represent your lifestyl