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Budgeting ÔÇô An overview

Friday, 22 May 2015
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Manage your spending by creating and sticking to a budget. - Alexa Von Tabel

Budget planning

In ordinary terms, a budget is a plan for likely income and expenses for a given period. A budget provides an easily understandable breakdown of how much money is coming in and how much is being spent. Creating a budget does not mean that all your money troubles will be sorted out, but it is an important step to determine your financial health and create financial stability.

Advantages of Budgeting

Careful budgeting can vastly affect your financial situation. Frustrating, as it is to create a budget, adhering to it is even harder. But truth be told, the advantages of budgeting are manifold. 


          * Helps develop a money spending plan 

          * Allows you to always have enough money for the things that are important to you and things you need

          * Helps identify any wasteful expenditure if any

          * Is a sure fire way to work your way out of debt if you are currently in debt or better still, stay out of debt.

          * Decreases stress

Preparing a budget

Some major categories that you will have to include in the budget are housing, utilities, food (groceries and dining out), insurance, travel, clothing, entertainment, and miscellaneous. Keep in mind that you will need to budget for some expenses that will not occur every month. More importantly, your budget should allocate some amount towards personal savings like retirement savings, an emergency fund, or any other savings goals you may have. Set aside money for your savings first.

Tracking the Budget

It is important to track your expenses either on a weekly or monthly basis. This will help to see if you are actually adhering to the budget. You can track your spending on an ongoing basis via an Excel spread sheet, an online service or a personal finance program. Tracking your spending is a tedious task, but is essential to find out exactly where your money is going. When you track the budget, you may notice certain areas where changes have to be made. Consider all the available alternatives before make changes to the budget. 

Create a budget, track it, adhere to it and see the difference when you make your hard earned money work for you.  


Last modified on Friday, 22 May 2015 12:37