Personal budget refers to a financial overview that actually refers to your income, expenses, savings or debts that you have incurred and their repayment. When the personal budget is being carried out, all your spending of the past and individual debt is put into consideration. The process of carrying out this personal budget involves a couple of methods and tools that assist in the creation, usage and adjusting to the personal budget. Take for an instance, When you look at jobs, we can term them as income generating projects while expenses and monthly rent are expenses and do not add any value to your personal budget.
Why Should Individuals Keep Track of their Budgets?
In order to carry out a personal budget, you need a couple of tools and regardless of the tools used, it’s the main purpose is based in the accuracy as well as the currency of the specified data Lately, many people prefer computer generated budget mainly because there is no need to rewrite or recalculate whenever a fluctuation is there.
Below are the tools used in carrying out a personal budget:-
- Pen and paper – in this method, all you need is a pen, piece of paper to write on; they can later on put in binders or file cabinets. Another simple way is by use of budgeting books and bookkeeping forms that you can fill in the blanks to create your budget.
- Money Management software – there are soft wares written specifically for the purpose of money management. They are created to focus on your personal account information like checking your savings and money. These are able to categorize your past expenses and also display monthly reports that are useful in future personal budgets.
- Spreadsheet software – this software that allows budgeting by performing complex calculations using calculations. For example when you are keeping track of income and expenditure.
- Money management websites – there are websites that have been designed to manage personal finances,
- Spending management software – this is a budgeting software which utilizes a specific amount of money, cash that you have at hand
A personal budget should have the following:-
- Purpose – This is a goal that you are able to meet within a certain time or period.
- Simplicity – u should choose a plan that you are able to keep up with
- Flexibility – a budget should be flexible and a consumer is supposed to expect a changed personal budget from time to time
- Budget for irregular income – a household with irregular income evaluation of average income to avoid using money that you did not plan to and you run out of money. In this case, you those months when the earnings are less this way it is going to be easy to carry out a good personal budget.
References: “Report “Consumer Expenditures 2014“