Analyse your current situation

Before we start planning for a real budget, we must identify the different kind of budget there are.
Budget consist of the Net Worth Budget and the Cash Flow Budget.

Net worth budget is used to measure how much of your resources can be used to achieve your financial goals. These includes sleeping assets (Emergency cash), working assets (investments), lifestyle assets (properties for usage only) . You should also consider your liabilities. A car, is not an asset. its a liability.

Assets minus liabilities equals net worth. Net worth is a measure of wealth. Most of the times, only sleeping and working assets can be used to meet your financial goals.

For personal budgeting, we use the cash flow budget.

For this, there are two rules.
1) Use less than 35% of your income to service long term loans.
2) Regularly save more than 10% of your income.