Personal Finance Goal Number Eight: Building a Budget Plan That Suits Your Life
Most people are not very keen on making a personal budget, however it is an important part of financial planning. Unless you have some idea about how much money you have coming in and going out each month, you cannot accurately plan a financial budget. In order to have an idea about your spending and balance, you need to make a detailed account of every penny you spend. So if you want to stick to a budget for the long term, you have to think carefully about how you will implement this within your life.
The first thing you have to do before making any personal budget planning is decide what your budget goal is. This is the ultimate goal of why you're undergoing this budgeting in the first place. For example, examples of a personal budget goal might be: Save $1000+ per month for the down payment on a house. Or, pay off all existing credit card debt by the end of the year. These sorts of goals make it easier to stick to a monthly expense budget.
Another goal you have for your personal budget planning process is "Maximise returns". In other words, you want to set aside a portion of your income for future savings. This could be done through stock market investing, mutual funds, or creating a retirement fund. Whatever you choose, make sure it is something that you can actually afford and that gives you a good return on your investment. You don't want to go into debt in order to save money.
Finally, you will want to set up a household budget to help you save money. This is also part of your personal budget planning. Household budgets look at the big picture and work to save money and cut expenses where possible. This includes both income and expenses. A monthly bill tracker will also take into account the big-picture things you can do to change your life for the better (like taking charge of your finances and setting up an effective spending plan).
In addition to the three goals above, you will also want to include one other aspect of your personal budget planning; financial literacy. Financial literacy is a core component of the Personal Finance Lifetime Ambition, but of even greater importance. People who understand how saving money works are happier and more effective in their financial planning. The Financial Literacy and Budgeting Coursework from the Personal Finance Lifetime Ambition can give you the financial literacy you need to be successful with your financial plan. Learn more here: https://moneypatrol.com/how-it-works/.
Finally, make sure you set aside some time to write down all the bills you get every month, even the smallest ones. Write down the minimum due, whether it is a credit card bill or a utility bill. Write down any other fees you may owe, and make sure you understand what the interest rate is on these fees. Be sure to keep track of how much money you have set aside for your monthly expenses. Then, compare the amount you have set aside to the amount you spend each month on your expenses, and you will see what kind of budget you are on! This post https://en.wikipedia.org/wiki/Personal_budget will help you understand the topic even better.