More about Budgeting

Here is how you can become a pro at budgeting

Budgeting is nothing but creating a plan for spending the money ...

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Here is how you can become a pro at budgeting

The difference is in the approach:

Have you noticed that two people who are at par at drawing a similar salary and who also have similar lifestyle may not be similar in their spending pattern? Indeed, the difference between the people is that while one has plenty to spend and nothing to save the other person can save reasonably enough. The difference is the kind of approach that they have in general towards their finances and towards budgeting in particular. It is obvious that your approach to budgeting has a big influence on the standard of life that you lead.

What is budgeting?

Budgeting is nothing but creating a plan for spending the money. The plan is called a budget. So, basically, a budget allows you to make a list of your income and the expected expenditure that you may have and it creates a clear understanding in the mind of the person as to his net worth. The net worth of the person is the difference between his assets and liabilities.

It is there in black and white:

Experts recommend that everyone who is handling money or is earning money must per rule follow good budgeting practices. This is because when anything is put down in black and white, it puts it in perspective and gives the person not only a clear idea about his financial conditions but also helps in prioritizing his expenses. He can bring himself clearly on the expenditures that need to be made no matter what and allows him to take a call on the expenditure that can wait till the nest salary or avoid such expenditure that has no consequence whatsoever.

Budgeting is known to reduce compulsive shopping:

Drawing up a budget is particularly helpful if you have to lean towards compulsive shopping. Compulsive shopping is when people buy things at the face value without really having any use for them. How efficient budgeting can help is that it allows the person to have a clear idea about the money that he will need to keep aside for his necessaries and to use the remaining bit for his other expenses.

Budgeting can help a person steer clear of debt:

When the person knows for sure that he cannot afford to buy any more than what he can actually, automatically it will dissuade him from buying something that only has some impulse value to him. Instead, he will try to reason that money saved on such unnecessary expenditure can be channelized into more productive ones. This is the sure shot way of the success of this system.

Not drawing a budget can seriously be a problem:

 On the contrary, if the person has absolutely no clue about his financial standing because he never draws a budget, he is sure to be over confident about the amount of money at his disposal and more often than not in a position to be able to overdraw his limits or take a bad financial decision. This itself has the potential of spoiling his credit worthiness and not look so good on his credit history.

Here are top tips for you to learn:

  1. Draw a budget:

Nothing can really take the role of a budget. However novice you are, you must start budgeting the moment you are in charge of the cash and expenses. There is no age for budgeting. In fact, people who drew up budgets when they were children have definitely grown up to be experts in it. The earlier you start it is better.

 

  1. No plastic, only cash:

Even though one can go on extolling the benefits of the credit card, it is absolutely contradictory to the idea of good financial practices. If you want to get back to being efficient and within your means then you must certainly do away with paying through the cards. Use only cash in all your transactions. Soon, you will realize that the physical act of removing cash and paying will reduce the urge for over spending and you do not accumulate any interest laden debts either.

 

  1. Spend a minute daily:

This is by far the best advice ever. Every morning, spend at least a minute or two deliberating and checking on your finances. This will help you fix any problem that you may have in the day. It is also recommended that before you go for binge shopping, you have a complete picture of your finances otherwise you might overindulge and end up in debt.

 

  1. Keep aside a fund for socializing:

Don’t let the budget dampen your social spirit. That would be the worst thing to happen. Instead, allocate a fund for socializing, entertainment and lifestyle. Now, you can save as well as splurge without a worry in the world!

 

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