STEP 4!
Hopefully by now you have read Steps 1, 2 & 3. If not, go check them out first!
This is by far the most exciting part of creating your personal budget:
SMASHING. THOSE. GOALS.
Once you know how much you have to play with, by taking your
Salary/Income
Minus:
Fixed expenses / Minimum payments
Variable expenses / Lifestyle costs
Sinking Funds
What you have left is what you can put toward your financial goals!
Whether this is to overpay on debt balances to clear your debt and become debt free, or a larger saving goal such as a house deposit or to travel the world.
Whatever your goals are, this is how much you can afford to put towards it based on your previous figures.
If you feel like you want to be able to put more to your goals than what your number is telling you that you can, then you will need to go back and tweak your lifestyle costs or sinking funds to be able to create some extra headroom.
You may find that what you're proposing for a Christmas budget is large and unsustainable, and look to re-asses this. You may also review your subscriptions and realise you are paying for things that aren't really important to you compared to your bigger goals.
By budgeting this way, it makes you really aware of what you spend and how increasing spend in one area can impact your bigger life goals and plans!
For me, it makes me feel more focused to cut those unimportant items out, so I can focus on my bigger dreams!
Hopefully this has been useful in understanding how to start a budget. The budget tracker in my shop does all the calculations for you if the thought of calculating this seems a bit too much but you still want to get started.