All about budgeting
Budgeting is the process of allocating funds/money to things that you want to spend on. Or simply a plan on how you will spend your money. This spending plan is called a budget. You should know your most important things and prioritize them when budgeting. Do not allocate money to things you think are not important.
Making a budget is same as planning in advance what steps and what rout you will take when spending money.
I discovered without a budget you cannot make things move or progress. It is the same as setting a goal in life. You will be following those set plans to execute your programs. Budget can be individual, family, group or national. I will concentrate on individual budgeting for today. A good budget will exactly work in the same way a train channel work. The train just follows it till the end destination. If anything goes wrong the train will jam. Therefore, you must make sure you plan your budget properly according to your purchasing priorities. You will avoid spending randomly and intentionally.
How to make a real budget.
I said real budget because people make budgets that they cannot follow. I do not know who you want to impress with it.
Follow the steps below to make a real budget
A. Identify items you need
List all the things that you need as long regardless of your total cash. You want to later find something out of that list.
Making a budget requires sorting out all the things you need into:
From the above listed items in (A) start grouping them into the above 2 categories. Realistically you will find that you do not need some of the things. So, exclude all the things that you do not need and that is called Budget purification. Say no to irrelevant items when making a budget it will just induce a budget deficit for nothing.
C. Price/cost research.
Do no fear the word research it simply means asking or finding out how much the items you selected cost.
It’s important to know how much the items cost for a real budget to come out. If you know the price already, please skip this step.
D. Funds allocation.
This is the actual budgeting now.
After the sorting is done next you will need to start allocating money to each item according to whether important or most important. The most important category will get funds allocation first and later the important ones.
Do not forget to bear in mind that the budget you make must be adhered to. If you locate $10 to an item, it should remain in that way.
Note that you can make a budget even when you do not have money. It will mean the next step will be to look for cash to allocate to your budget.
- Un-purified/un-prioritized item list
When you select items that you do not need your budget may go into deficit. Yet you have enough money but allocated to irrelevant items. So, you need to purify your items before allocating funds. Only make a list of the things you need.
- miss allocation of funds
When making a budget make sure you remain realistic. Some items need more money that others so allocate more money to things that needs more money and vice versa.
- Poor compliance to a budget
Unless otherwise, follow you budget because it is a guide on how you will spend your money properly. If you do not follow it then you will end up spending it on something that you do not need. Usually when making a budget we sit and think through meaning what comes out of it is really what will help us.
When you follow the above steps to making a real budget you are assured of the quality spending plan for yourself. It is important to have a budget and it helps preventing squandering cash. There are so many things that needs money but when you make a budget it usually rewards.