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text 2020-05-18 21:34
How to Make a Budget - Personal Budgeting Tips

Money plays an important role in every person’s life. The burning issue of every adult individual was, is, and will be on how to multiply revenue and savings. That is why it is crucial to be able to manage the budget properly. The accurately compiled personal financial plan will help one to improve his or her financial situation, will give an understanding of how much money will be needed to achieve particular goals, and will help not to worry about the future.



Set your financial goals

Setting your own financial goals is the first step in working on the Personal Financial Plan. If you have a precise aim, it makes you strive to achieve it. But sometimes even one chaotic, impulsive waste may become the reason why an individual lacks money. With constant aimless money lavishing, serious problems may arise, and a person can even become bankrupt no matter how much he or she had.


People may wonder why with the same income, one lives in prosperity, and the other always remains without cash. Why do some have money for a vacation or significant purchases while others barely make ends meet? It's all about planning a budget. So set a few goals, for example, decide on the holiday destination or buy a car, and count how much you will need for each of the points. With this knowledge in mind, it is easier to put money aside.


How to start?

It is better to start planning the budget with the analysis of both income and expenses of previous months. Preferably for the last 3-4 months. It is necessary in order to get a complete picture of the current financial situation. Therefore, carefully write down all your earnings and investments. (You can use this personal finance essay example to organize your writing in the best way). Afterward, analyze these numbers to understand where and how you can save money. Planning a budget is better once a month or quarter.


  Categorize Spendings

The easiest way to categorize spendings is in accordance with the method of 6 envelopes. The idea is very simple: at the beginning of each month, you sort all the funds into different categories according to the target needs. Let's figure out how this works.

So, take six envelopes and sign each:




There is no exact amount you should put in this envelope, but check your spendings for 2-3 months, and first put 30% - 40% of salary. If you did not meet this limit, write down the amount you had to spend above the norm, cut down some unnecessary expenses and correct the errors next month.


Utility payments and credit


In this envelope, there should be money for the payment of utilities, the Internet, mobile bills, and also a loan if you pay for something. As a rule, this amount is calculated according to the peculiar forms.


Personal things


Every month a person needs to spend money on hygiene products, cleaning items for the kitchen, clothes, shoes, a hairdresser, etc. Make a "check" at home, compose a list of necessary things/services and purchase them in the order of priority.




Investing in yourself or children is the best contribution to the future. Sign up for courses, buy new books, apply for college. Having enough savings is crucial here. Ideally, make sure to put as much money as possible every month here.


Vacation, Leisure and Entertainment


Remember the proverb: “Business before pleasure”. Cinema, cafe, hobbies as well as gifts to relatives and friends - without this it is impossible to relax and recharge to earn more. But the amount to be put in this envelope should be determined after you plan your budget for food, utility, and other necessary needs.


Large and Uncanned purchases


Expensive outerwear, furniture, household appliances, a new laptop, etc. – these items need to be updated within a particular period. For these purchases, money can be saved in an envelope or deposited to a decent bank to increase with time.


Record daily income and expenses

After personal budget is planned, it is necessary to strictly adhere to the established plan and regularly record and calculate regular income and expenses. This can be done, for example, in a notebook. All items of expenses must be written there and bills are to be added.


However, this method may not be very convenient for everyone. After all, to find a record, sometimes you have to shovel a few pages. And there may be too many purchases to write about as well as checks to be saved, especially as they are often lost and forgotten about.


This is why it is more convenient to maintain a budget in Excel. Here you can automate the calculation. There are also specialized programs for managing the family budget. They are paid and free available on Android and iOS. There are even entire online services and extensions for the laptops.


Analyze and Correct Planning a Budget

Whatever method of budget management you choose, at the end of the month you should always analyze how accurately the plan is followed. If revenues were more than expected, and the expenses were less, then the budget can be considered as over-fulfilled. If the opposite, it is necessary to analyze what caused the failure to stick to the plan and take these errors into account when planning the budget for the next period.


After the analysis, plan the budget for the next few months, taking into account all previous mistakes. But even when your financial condition begins to improve, in any case, do not stop the work. Good results can be achieved only when there is constant planning of the budget. Once you leave it behind, money issues may more likely rise again.


All in all, now you know how you could plan your budget and spend money wisely to have stability and be calm about your and your kid’s future. Use the tips mentioned above and try to change your life and material welfare for the better. Good luck!

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