How Budgeting Can Transform Your Financial Life

By | September 1, 2015

Budget Planning Tools

Do you know what people do when it comes to budgeting? Nothing at all. Or their plans seems to fail no matter how long they hammer out their budget.

You might be wondering what is a good way of planning your budget then? I will take you through the basic steps of budgeting and we will discuss the benefits of sticking with a planned budget. It could transform your lifestyle entirely! Let’s start with the basics:

1. Analyse Income and Expenses
A few years ago, I considered analyzing my income as a waste of time but, I was wrong. You must know your cash flow well; it doesn’t matter if you’re from a rich or middle-class family. Frugal and meticulous people already have this running on automatic.

2. Set Goals
Once you know your monthly income and expenses, the second step is to figure out your financial goals. They could range from higher education, your wedding, your child’s education or an exotic vacation. List down your goals with a dateline, and stick to them.

3. Allocate Money
You must know how much money you need to meet your goals. Write down the amount required for each goal and divide it by the months you have in hand according to your dateline. You will come up with the amount you need the save monthly for that particular goal. For example, if you need Rs. 1,20,000 in 12 months for your post-graduation, you need to save Rs. 10,000 every month.

4. Stick With It
Most people find it tough to stick to their budget plan. Having realistic goals is how you tackle this issue. If your monthly income is Rs15,000 and your monthly expenses amount to Rs10,000, it’s not possible to save up 1.2 lakhs in 12 month. You either have to get a loan or increase your dateline to 2 years instead of 1.

5. Use Mobile Apps For Easy Management
It’s difficult to implement budgeting when you haven’t practiced it. You often forget to note down expenses and after a certain time you tend to lose motivation towards budgeting. Here’s where an app for managing your budget can be your best friend. You can try popular apps like Money View and Monefy for android. You can also check out the app Faayda, which claims to help you earn money while saving with their app.

Pardeep Goyal writes about personal finance at CashOverflow and can be reached at his Twitter handle.

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