Budget gives you an overall idea of your income and expenditure. Here,we have mention 9 very concrete suggestions, tips, ways or ideas to create a good budget.
WHAT IS ‘BUDGET’
One or other time of our life we all have heard the word ‘Budget’ but, unable to articulate it in proper words, If someone ask us what is ‘Budget’,We may not be in a position to answer it properly.
DEFINITION OF ‘BUDGET’
A budget is an estimation of the revenue and expenses over a specified future period of time.
A budget is microeconomic concept that shows the trade off made when one good is exchanged for another.
A budget can be made for a person, family, group of people, business, government, country, multinational organization or just about anything else that makes and spends money.
ADVANTAGES OR BENEFITS OF PREPARING ‘BUDGET’
- Budget provides you control over your own money
- Budget helps you to focused on your monetary goals
- Budget makes you aware with what is going on with your money
- With the help of budget you can organize your spending and savings
- With budget you can decide in advance about how money will work
- Empower you to save for future’s any unexpected or expected costs
- Budget helps you to communicate with your important others about money
- Potential problems can be detected early through the budget
- Budget helps you to decide your borrowing capacity
- Budget helps you to produce extra money
SUGGESTIONS FOR CREATING A GOOD BUDGET
Creating a good budget is not easy task, because, first of all, it is related with some arithmetic or mathematics, the subject dislike by many of us. But, than also we must create a budget,
While creating a budget, keep in mind, below mention suggestions & make your budget good budget.
1. First and most essential quality of a good budget is it must satisfy your requirements so, while preparing a budget create a categories in your budget that fits your personal situations, your personal spending habits Etc. Keep it clearly in mind that you are preparing a budget for your personal use not for someone else.
2. Good budget must be realistic, it should be not merely on the list of hope,wish and probabilities. It must have accurate income projections, no doubt, there are chances of minor variations but it must not be major enough, which entirely wipe out the meaning & effects of budget.
3. A good budget must encompass enough categories to give you a meaningful & fair enough picture of where your money goes and which are the areas where you are able or in a position to cut costs.
But it should not be too much complicated, confusing and detailed, that tracking it becomes tiresome & boredom task for you.
4. A good budget should have the provision of future’s expenses, means it must include all the expenses that does not occur on a regularly or monthly basis such as, Personal property taxes, Auto maintenance, Insurances Etc.
5. A good budget is flexible and evolving, During regular review of your budget, if you found some categories need to be eliminated, Some categories need to be added that types of flexibility makes your budget good budget.
6. A good budget must have cash expenditure tracking and recording system, because spending of cash is the major leak in most budgets, Cash disappears very quickly,so, if you don’t write down everything you spend it on, You may not have fair enough idea of whereabouts of your cash spending.
7. A good budget must have a line item for savings so you treat a contribution to your savings account just as you would a bill you owe.
8. A good budget is not only a dull demonstrations of figures but it’s about your dreams, it’s about setting your financial goals, so more or less it is realistic written goals of future’s dreams, it’s not just about tracking your costs but it is a scrutiny process to utilize that unnecessary cost in a most useful manner.
Some of the examples of financial goals for which you can create budget.
- World Tour
- Buying a new car
- Getting out of a debt
- Saving for retirement
- Putting your kids through college
- Saving for a down payment on a house
9. A good budget makes you quiet aware about your spending patterns,it not only identifies areas where you are spending unnecessarily or excessively but helps to curb or reduce that spending.
[box type=”info” align=”alignleft” ]Some funny quotes about ‘Budget’
“A budget is just a method of worrying before you spend money, as well as afterwards.”
– Unknown
“A budget tells us what we can’t afford, but it doesn’t keep us from buying it”
-William Feather[/box]
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