In this era of spending more than earning, a planned budget is very important to save for future. Budget planning means we are spending with a purpose before a time period starts.
Budget planning can be for a day, a week, month and even a year. But to keep a closer look of the earnings and expenditure, monthly planning works the best which can be classified to weekly plan.
Budget planning should not be one that limits your freedom, but it should be about spending wisely. It is an action plan where we will have a clear picture of where our hard earned money is ending up each month.
It gives an organized way of achieving our monetary goal – like clearing the debt, making a saving plan, retirement plan, travel plan or simply meeting the grocery expenses without getting it out of our hand.
- Design the budget
Before every month starts make a plan and give each penny a destination in your plan. This is called Zero-based budget. Zero-based budget means when the income minus all the expenses equals zero.
- Do the budget planning together
Sit with your spouse to make the monthly budget plan. It is important to both of you to be on the same page.
- Every month is different
Monthly expenditure will be different – like the school fee, house or vehicle maintenance, vacation time, festivals or even guest visits. Regardless of the change in occasions, make sure to have the expenses within budget.
- Categorize
Saving should be first category. Then plan for food, shelter, utilities, clothing and transportation. And then fill the rest of the budget. Make sure to have the savings account stable with setting it up for automatic deductions, so that you don’t end up taking expenses from saving.
- Cut down the extra-expenses
Don’t hesitate to cut the extra expenses where ever possible. According to monthly requirement cut down on the things that can be taken out for a month like dining out less, shopping when there is sales or utilizing the discounts in a store. Budget cut should be temporary.
- Schedule and stick to it
If you are planning a budget, make sure to stick to it. It requires lot of effort to spend as noted in the budget plan. Ensure to stop spending when the money for a particular category in your budget is finished.
Focus on your goal. If you have a financial goal like closing a debt account or building emergency fund you would automatically start spending lesser.
- Give yourself lot of grace
It takes time to stick to the budget plan. It won’t be perfect on the first few months, but with a strong goal you will get there.
- Online budget tools
If it is difficult to design a budget plan yourself, use online budgeting tools or mobile apps to update and track the saving and spending. Plus you can sync the budget with your spouse for dual use.
Budget plan can be prepared even with an inconsistent income by planning the budget with the lowest earning. Prepare the list of all things in the budget and prioritize from the most important one to the lowest. Be sure to use the money wisely. By planning a budget even with inconsistent income, we will have an idea where the money is spent.