Debt Consolidation

Five Things You Must Know About Personal Budgeting

Your financial fitness depends upon how good you have been with personal budgeting. It is your budget that determines whether you are controlling your money or money is controlling you. It shows you clearly where your money is coming from and where it is going out. Following is a brief overview on five major aspects associated with budget.

What is Budget?

A budget is a responsible financial plan. It is a tool that keeps you updated on the flow of money in your daily life. It helps you get out of debt by allowing you to save more money. It makes sure that you do not overspend and thus keeps you out of debt forever.

Who Needs It?

Everybody needs it. If you do not have a tool to track your spending, you are likely to fall into debt problems sooner or later. There can be several causes for financial crises that thousands of consumers are facing today – it can be job loss, personal or family illness, or other such things. But, the major cause in most cases has been “overspending”. The kind of lifestyle that media and businesses are promoting these days encourages us to “buy now, pay later”, which actually opens ways for overspending and debts. So, unless you have a plan, you will not be able to live a financially disciplined life.

Creating a Budget Plan

Everybody understands the benefits of having a budget plan, but the reason very few people have it is that most of us just do not know how to create a responsible financial plan. It is not very difficult to do though – all you need is a strong dose of self-discipline and determination. You do not necessarily need to buy an expensive budgeting software tool. You can create a plan using a simple spreadsheet on your computer. If you do not even have a computer, you can just go ahead and use a simple piece of paper. You can create two columns – one for the different sources of income and second for your expenses. You will have to keep coming back to this piece of paper and update it on how much you are earning and how much you are spending. You can then cut down the fat from expenses column by avoiding spending money on things that you can live without.

Living With a Budget Plan

A personal budgeting plan can be successful only if you implement your strategies thoroughly. For this, you will need to control your emotions. You are watching television, reading newspapers and magazines, and living in the society – all these things will stimulate you again and again to buy things that you do not really need. If you want your budget plan to be successful, you must work on controlling your impulses.

Planning for Emergencies

Financial emergencies can hit anybody anytime; it can be a huge, unexpected medical bill, the wedding of your daughter, school and college fee for your children or just anything else. Worse, we all have experienced it sometime or other – such emergencies hit us when we least expect them. The only way to deal with them efficiently is to prepare for it in advance. You must have at least 6 times of your regular monthly expenses in an emergency fund. Make sure you plan your budget accordingly.

Overall, if you want to live a stress-free life and enjoy a sound sleep at night, make sure you have a personal plan.

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Posted in Budgeting, Debt Consolidation | 4 Comments »

4 Responses to “Five Things You Must Know About Personal Budgeting”

  1. alisa says:

    Budgeting plays a vital role in everybody life . This is really crucial for a salaried person where the source of income is fixed and has to play according to the fixed income. With the advent of these credit card companies the people are to tempted to spend more and the final outcome is that they are in debt. We have to make a financial ledger of our debits and credits and try to minimise the debit and maximise the credit. Because future is uncertain and our liquidity should be strong to meet the emergencies.And if our life is well planned we can enjoy the life to our fullest

  2. Dennis says:

    Unfortunately, many people don’t consider personal budgeting to be important, but every time they analyze their household budget, they always wonder where they spend more? Personal budgeting is the necessity of modern life. It not only provides us the forecast of our expenditures but also enables us to measure the actual spending against the forecasted. So, for the one who wish to have a control over their spending, personal budgeting is the key step. Without any budget or plan, our finances lack direction and unfortunately, at later stage we will be debt.
    Anyone can himself/herself make his/her budget line but if it is done with your partner, it will proof to be more effective as everyone who will be affected by the same is considered.
    An important thing to be keep in mind is just to create a budget plan will not help you out, you have to stick to it. Moreover, the budget should be realistic where all the necessities should be taken care of.

  3. [...] plan, very soon it will start controlling you, pushing you into debts and other financial troubles. Personal budgeting is a tool that you can use to control [...]

  4. michael says:

    Very enlightening points. In the present time, everybody needs a good budget. If you do not have it, you are possible to fall into some trouble and will not be capable to live a financially controlled life. Today, every person is very busy and there are a lot of problems in daily routine which may lead to overspending. These problems may be like some family illness, any necessary item or other such thing. To manage such type of problems, it is necessary to create and manage a good budget. A good budget is basically a financial plan which keeps you simplified and organized on the flow of money in your daily life. Many people think creating or planning the budget it is very difficult and complex task. As mentioned in the above article, It is very restraint and determinative task. You are not required to purchase any Computer Software, you can just start with a large paper and pen. Think what your income sources are and how much you are spending. You can cut back your expenses where you are overspending. In the article, it is clearly mentioned to plan some money for emergency. I am also influenced with this point very much. The Emergency can knock your door at any time. It can be your children fee or any unexpected medical bill. To manage such type of problems, it is necessary to plan some emergency fund. It should be at least six times of your regular income. One more thing, when you go out to purchase daily routine items, keep a small list of things which will tell you that you are spending as per your requirements. It will help you to avoid from unnecessary things. If you want to live a smooth, organized and peaceful life, make sure that you have a good budgeting plan. I t is really very crucial for simple salaried and medium type normal person.

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