The budget of any individual or family consists of two parts: one is the income, that is the amount of money that is expected to be received, and the other is the expenditure, that is, the amount to be spent. When it comes to budget planning, the first thing to do is to estimate your income, because this determines how much you can spend.
The secrets of budget planning
Do not spend more than you earn
If the situation is such that the sum of your expected expenses exceeds your income, you can apply for a loan or credit. But be careful. You should not include loans in your budget if you don’t know what your budget will be at the moment when you have to repay the debt. However, if you are sure that your financial difficulties are temporary and you will have money soon, then you can safely ask for a loan.
You should not depend on casual income
To stay out of trouble, include only fixed income funds in your budget. This can be property rentals, salary, etc. If you have a casual income, it is better to use it to repay your current loan or set aside the funds as long-term savings. If the one-time income appears regularly, you can afford to spend money on holidays, buying nice things and holidays.
Determine which expenses are most important
To spend money wisely, you should first make a list of all necessary payments. First of all, list the most important and obligatory ones: loan payments, utility bills, food, clothes, medicines, etc. If possible, also set aside some money for unexpected expenses. If you don’t have credit, include long-term savings in your budget planning items.
Set long-term goals
If you’ve made a list of mandatory expenses and you still have money left over from your income, put it aside for important expenses in the future. This could be buying a new appliance or car, paying for a trip or the down payment on a mortgage loan, etc. If there are loans, you can use the money left over to pay off the debt early. If there is still money left over after that, feel free to allocate it for entertainment, holidays, going out to restaurants, etc.
Always follow the plan
It may be difficult to stick to a plan at first. However, don’t change spending items on impulse. For example, if you spend money this month to buy another beautiful dress or watch, you may find it difficult to find the money to pay off your loan arrears. Try to keep all your expenses for the month unchanged.
Keep track of all your expenses
The amount you spend is likely to vary from month to month. This is because prices in shops go up, and needs of the moment are replaced by other needs, meaning that what you need to buy today you won’t need in a month’s time. Therefore, you should constantly monitor what you spend your budget on, so that you realise in time which of the items of expenditure takes up a huge share of your income. This way, you will be able to adjust your spending in time so that your budget does not suffer.