Creating a family budget is very crucial and doing it right is even more.
We need to have a family budget. How many of us will like to travel in a train without knowing where it’s heading? Not having a family budget is like riding your financial life without a destination. Many of us have a hard time finding enough surplus funds. Most of the time is spent balancing income and expenses.
Preparing a budget is fairly a simple activity and may be done once or twice a year. A budget is nothing but a statement of your expected income and anticipated expenses. Most of us will have a good idea of the income we may have during the year and similarly we know where the money is going under heads like food, housing, utilities, transportation, clothing, insurance, EMIs, entertainment and so on. This statement shows at the end of the year how you are placed financially; what kind of surplus or shortfall you may have at the end of the year. This will then give you a good status on your financial state and how well or bad you are faring.
The personal budget helps in plan our income and expenses better and create scope for that little something that we can save or invest. All you need to do is to record them on a regular basis. This will not only help you monitor your expenses but will also help you in identifying your wasteful expenditure creating the much needed surplus for investing.
Discipline yourself to live within your budget plan.
If you do not prepare a personal budget, you would not be in a position to meet your long term financial goals. Even if your incomes rise in future, it is likely that your expenses will outpace your income. This way you will always be on your toes to manage your income and expenses. That surplus money for investment will always remain an illusion.
If you are struggling to meet your expenses from your sources of income, the objective of your budget is to find ways to generate enough surpluses for investment. For this try to fix a cap for each type of expenditure that you incur. Cut down your incidental expenditure and find ways to minimize others. This will be a difficult task at the beginning but your efforts will start giving fruits by generating a surplus out of the fixed corpus. Set yourself a target to save 10-15 per cent of your monthly income every month.
If you already have surplus income after meeting your monthly and annual financial commitments, you may still want to minimize your unnecessary expenditure and start generating a larger surplus.Your target now should be increasing your monthly saving potential to 20-35 per cent of your monthly income. Here is when you can start allocating your surplus funds to work for your long term goals.
Click here to not just plan, but also to achieve all your financial goals.