Budget – A Blueprint for Your Expenses

Present day lifestyles make us spend as much as we earn. Bill payments, credit card bills, school fees, rent, entertainment, shopping, etc. are an inseparable part of our lives that do not leave us with much to save despite the intent. There are several steps one can take to curb expenses and adopt a planned approach towards spending. Creating a budget is one of the easiest ways to do so. Money management experts have reiterated the importance of a budget, time and again. If you have a similar expenditure pattern with little to spare at the end of each month, understand what a budget is and how you can manage your money better with a budget.

What is a Budget?

In simple terms, a budget is a tool to assess your expenses and income. It is also a spending plan. It is the first step you need to take for the accomplishment of any financial goal, be it short or long term. It is essential to understand that preparing a budget is to understand how much you earn, what you spend your money on and accordingly plan your spends, saving and investment.

Importance of a Budget

Without a roadmap, you are heading aimlessly. This is exactly what happens when you receive your pay check at the beginning of each month. Earning through a job is a means to fulfill your aspirations. Thus, you need to plan your spend. You can buy that luxury car or swanky apartment or head to an exotic location for a holiday – only if you think TODAY about how you are going to do it TOMORROW and this can be done only with creating a budget.

Objectives of a Budget

Since preparing a budget is considered as an important means to realize financial goals, there are a few basic objectives that every budget should fulfill. You budget should help you,

• Reduce expenditure
• Spend as per plan
• Pay yourself first
• Pay off debts
• Prioritize expenses
• Achieve your lifestyle

Creating a Budget

Preparing a budget is a process which begins with listing down expenses and incomes. To start with you need to assess your net worth and set financial goals to achieve the lifestyle you wish to live. This further needs to be broken into short, medium and long term financial goals. Here is a step wise guide for preparing one.

1. Note down all your monthly expenses and income.
2. Expenses should be categorized as fixed and variable. Identify the elements in variable expenses that can be adjusted.
3. Install an app on your phone like Money View and use its Budget feature.
4. Analyze the results to understand how much you can save, how you can reduce debt and which expenses can be curbed. Money View provides you a convenient financial summary that shows you a snapshot of your income and expenses and also where you have spent and how much.
5. Once you have assessed how much you are left with, embark on savings and investments with simple ECS mandates.
6. Review your budget every few months to understand how successful you have been in sticking with it and modify it as you pay off debts and meet other financial goals.

Creating a budget may seem boring and tedious but is extremely rewarding in the long run. You should create a realistic budget keeping in mind not only spending habits but your lifestyle too and be prepared for deviations as well. Your Money View App will be with you every step of the way and help you.