The first part of personal finance is budgeting. Budgeting is important because it ensures that you will always have enough money for the things you need and the things that are important to you. 

The first part of creating an efficient budget is identifying your goals. These will be different for each person depending on living expenses and personal circumstances. When specifying goals, there are three main categories: needs, wants, and savings. Needs are essentials for living: absolutely crucial for survival. Things like food, shelter, medication, clothing, or transportation. Wants are just that, want, things you can live without. Things like home improvements, going out to restaurants, subscriptions, designer clothing, or gifts. Savings would be for personal long-term goals like retirement or emergency funds. 

First, make a list of everything you’re going to include in your budget. Income, expenses, liabilities, and assets. Income is how much money you make, whether it’s your salary or passive income. Expenses are things you spend money on, like rent, groceries, or wants. Assets are things like cash and physical property; any resource that can be used as positive economic value. Liabilities are things like debts or accounts payable; something that indicates a person owes a sum of money. 

When identifying goals for your budget, you should consider debts, liabilities, and savings. For example, if you have student loans or car payments, you would want to account for that while making your budget. 

Obviously, there are some payments you can’t miss, some you can but might not want to, and some that would not be detrimental to your life if you did miss. For this list, I have rent, food, and gas as things to not be missed. Cell phone and Internet access are things that would preferably not be missed and savings as something that can be missed. But, depending on the circumstance, like maybe Internet access is crucial to your job, the prioritization will be different for each person. 

In terms of unexpected expenses, life can be troubling, there are lots of unexpected expenses that can be thrown your way. But how do you account for them in your budget? This can be achieved through savings. By setting aside a small portion of your monthly income, you can be a little more prepared for things like medical emergencies, pet emergencies, or major auto and home repairs. This can be challenging to deal with when you have a fixed income, that’s why saving are important.