No matter how much money you make, it’s always important to budget carefully and manage your finances wisely. As we all know that most important fundamentals of personal finance is to have a Budget. But for many people, budgeting can seem like a daunting task. Making a budget is one thing but sticking to it is another. Since creating the budget is like the first step towards your financial journey, managing a budget remain with you throughout your financial journey. Along with that if you manage the budget well, that will decide how well you are progressing in your financial journey. In this guide, we’ll walk through the steps of managing a budget so that you can understand how it works and see if it might work for you too!
It’s Important to stick to Budget
You might have number of goals or other financial commitments which you want to fulfill, so it all come down or basically starts with a budget. This budget will not do any good to your financial journey. Managing and maintaining the budget is very much needed because then only you will be in charge of the money.
In order to maintain a budget, you’ll need to do five things.
- Being Real
- Track your Income and Expense minutely
- Use Technology to save more, such as money saving apps.
- Stick to cash, not credit cards
- Budget to zero
You might have hundred of goals which needs money but you cannot save all your income to those goals right. Thus you have to make a budget where you have to be realistic, it’s always better to be realistic than ambitious. Yeah you can push ourselves to spend better and save more but you have to be realistic when you are setting any budget for ourselves.
Being real is the first step towards sticking to a budget.
Track your Income and Expense minutely
You have to consider all your possible sources of income (mainly which are in liquid form), like salary, getting rent, freelancer payment etc. Every month create a list of each sources and thus you need to keep our expenses less than the salary we are getting.
Now once the income is sorted out, do the same for expense where you need to create the regular monthly expense like rent, groceries, insurance etc. You have to be careful here and thus need to record everything you spend. This will help you to know where your income is going.
Use Technology to save more, such as money saving apps.
Now once the income and expense is done, you need to use the technology to save more, apps like PaytM, FreeCharge can help you to save some money while paying for any expense. Now why this is important in maintaining budget is because this can help you give some cushion to save more.
Stick to cash, not credit cards
Credit card doesn’t help you to stick to your budget and the first thing you should do is to ditch that credit card. Credit Card is like a motivation to spend more and thus once you ditch it, you will always remain within your budget. Credit Card is like using someone’s else money and thus you have to use real money i.e. cash or debit cards.
Budget to Zero
Budget to Zero simply means that all your money has a job. Some money spent on expenses where some money left after the expense should invest it to your financial goals. This is nothing but Zero-Based Budgeting where the left over from income minus expense should be in Investment. This is the main purpose of the Budget where you can minimize the expense and increase the investment.
In this article, we’ve covered everything you need to know about managing a budget. Managing a budget is not as easy as it sounds, but once you get used to it, it will become easier and more enjoyable. You don’t have to do it once and then never look back—you can keep your budget up-to-date over time by making adjustments every once in a while. Remember that the best part of managing your own budget isn’t just how much money is saved; rather it’s knowing exactly where every dollar went right before reaching its destination (or not!)