At this point of time, there are very few people who understand the needs of budgeting their daily expenses. Some people just don’t know how to make it, others are don’t have intention on limiting their expenses. That is the reason why every last week in every month we saw any marts, restaurants, stores are more quiet comparing with previous weeks. Because people tends to spend their money as soon as they get paid and think about saving it several days before getting paid again. In order to reverse this trend, people need to become more responsible with their spending patterns. One tool to help people manage their expenses is a personal budget.
A personal budget is a financial plan which sets limits on the amount of money that will be spent on any expenses category in any period of time. The common period is one month. The limitation should be based the amount of income being received, fixed and flexible expenses. Fixed expenses are usually related with the same amount of money that has to be expensed because of obligation. For example: mortgage, school fee, cable tv etc. Flexible expenses are usually related with variable amount of money that has to be expensed based on people behaviour. A good budget will consider all the factors above and still have some savings on income by the end of month.
Many people have no idea exactly where or how they spend a good portion of their money. How many times have you taken money from the ATM only to realize a couple of days later that it is gone? Many times it is difficult to remember how exactly you spent the money, and often times this money is wasted on unnecessary purchases. A budget will help prevent this from happening by making a person accountable for the money that they spend. If a person only has $100 left for buying a fast food.
There are many methods available on how to categorize the expenses, which categories should have higher allocation, and many other considerations which should make people finally understand that they don’t have much money to cover all expenses. Another great benefit is that a budget portrays an accurate idea of how much an individual can actually afford to pay for various consumer items. Whether it’s a house, a car, or a new TV, a person will be able to determine whether or not a certain purchase will fit within their monetary constraints. This acts as a safeguard against getting in over your head financially.
It is important to realize that simply creating a budget is not enough. This in and of itself will do a person absolutely no good if he does not discipline himself to stick to it. At times this will very difficult, particularly if a person has established the habit of freely spending without a second thought. However, the long term benefits of financial freedom, debt free living, and a comfortable retirement far outweigh any potential difficulty.
This template is a simple template which should give you better understanding on making a monthly budget. There are only two sheets in this template. The first sheet is a budget sheet where you can type your income and expenses category and fill your budget. Try not to be precise as a financial people. Just type all expenses that you can remember and categorize it in words that you understand. There are many references available on categorizing expenses, but you don’t have to be bounded with that. The category you type will become a selection category in the second sheet (income and expenses tracker sheet). This is the sheet where you can type all of your daily expenses and see the summary in the budget sheet.
