PERSONAL BUDGETING
What are personal budgets?
A personal budget is a financial plan created by an individual or a family to manage income, monitor expenses, and allocate savings to achieve future goals.
Income: The personal budget assists in managing salary. In budgeting, everything starts with the payment. Here, the individual budget helps to determine what portion of the payment is to be allocated for different categories, which cover everything from basic needs to investments.
Expenses: Generally, there are two kinds of costs in the family and for individuals: regular and occasional. Expenses have to be allocated so that they stay within income and savings. After this, an individual should stick to that allocated budget for expenses until and unless an emergency occurs.
Savings and Investments: A portion of income should be allocated for savings and investments. This allows individuals or families to secure themselves in retirement, achieve their future goals, and successfully pursue long-term plans. Investing in good sectors can return good value for money.
Debt Payment: Budgeting can help reduce debts, loans, and credit card balances. Budgeting for daily debt and loan payments minimizes debt and leads to a debt-free state.
Financial Goals: The personal budget often helps achieve financial goals like going on vacation and providing college funds for children. Since it assists in allocating budgets in these areas, there is always a chance of achieving them for families and individuals.
Budget Tracking: Individuals should be aware of their income and expenses so that they won’t go off track. Proper everyday data on expenses should be maintained; this would assist them in achieving their financial goals and managing their income and expenses in real time.