12/06/2021
IMPORTANCE OF BUDGETING:
What is budgeting and how does it impact our monthly savings and making surplus?
Technically, budget is the predetermined plan to meet the expenses with the available inflow of money. All of us have specific expenses every month which are fixed in nature, most of us who are employed under a job, have fixed salary. So in layman’s term, planning to meet the monthly expenses with the salary we get is budgeting. The purpose is very simple, matching, scrapping out some of the expenses-doing little adjustments-making some savings in the procedure.
Everyone has tried this exercise at least once in their life. May it be for any social ceremony, tour, get together or anything else where some money is required at once. The goal is to determine or calculate the requirement, but where from it would be met? Answer – Savings. Have we ever implemented budgeting to create savings? For maximum the answer is NO.
Keeping the gross monthly earning in mind, we need to divide our monthly expenses in two major categories 1. NEED and 2. WANT, trying to maintain the total at 75%-80% level so that a future savings can be made. Senator Elizabeth Warren’s book, All Your Worth: The Ultimate Lifetime Money Plan, makes us understand the importance and role of budgeting in personal finance and to create and maintain savings.
“A budget is telling your money where to go instead of wondering where it went.” – Dave Ramsey
So, the crafting of the budget is done, but we still fail to make our savings as per the budget. The most important things are self-review, sticking to the plan, realistic division, scrapping expenses where possible to keep the balance intact. To make it work, the budget and the action to maintain it should be savings oriented.
“A budget doesn’t limit your freedom; it gives you freedom.” - Rachel Cruze
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