Budge for the budget!

Union BudgetThe Union Budget is on everyone’s mind! What’s in it for you? What can you buy, what can you save on, how will it impact you in the new fiscal year? Questions abound, the Union budget is all about assessing the financial health of the country and its government.

In India, it has been a deficit budget since the 90s. Expenditure has been more than the revenue, resulting in a need to borrow. The present deficit is around 4.5% of the GDP (2014). With the Union Budget, the Indian government sets the tone of the year’s plans and policies, incomes and expenditures. When the government of a country does that, shouldn’t you be doing this at an individual level?

Did you know that an ‘annual budget’ is a relatively new concept? Years and centuries of mismanaging the revenues of the country/ kingdom led to the idea of establishing a financial directive in the 1700s in Britain. Reformed and evolved over the years, today the annual budget is come to be known as a nation’s statement of financial control and accountability.

Why make an annual personal budget?

A necessary evil or grief-giver, a personal budget is the base of all financial health. Creating a personal annual budget can be an overwhelming task, but when done you will know it was well worth the effort. You know how much you make in a year, but do you know how much you spent and what you spent on, this financial year? By making an annual budget you will be able to assess your income and expenditures better – a definitive way of building wealth. With an annual perspective in place, you tend to make best estimates of your cash outflow.

Still need convincing, here’s why you should make an annual budget:

  1. A standard monthly budget can become predictable, until that unforeseen expenditure on healthcare or that forgotten insurance premium and annual vehicle servicing. In an annual budget you get the bigger picture – by accounting that major expense in February, you can plan ahead to cut back on expenses in January.
  2. An annual budget calls for categorizing your expenses under various heads. This will enable you to set limits, giving you the locus of control – you will know which categories to spend less or more on. Perhaps, this will even make you aware of your own priorities in life!
  3. A sound budget is one that accounts for expenditures and investments. With an annual spending plan, you are already in control of your expenditures, which means you are better equipped to set out money for investments.
  4. An annual budget is the best way to evaluate your overall financial situation, subsequently leading you to make informed decisions about the near and distant future – be it utilizing that surplus for a home renovation, or investing to cover your child’s education or your own retirement.

Yearly budgets do what monthly budgets cannot – expand your insight. While it is prudent to spend lesser than earn, the reverse is more likely to happen to most people.

There is an easier way to manage your money – use a tool like Money View which will help in tracking (income), categorizing (spends), alerting (bill payments) and identifying (spend patterns), which will enable you to plan budgets of the future.

Click Here to Download Money View