Importance of Budgeting For Personal Finance

[Jasmine]

Do you know what the major issue for most people is? Well, it is not related to not being able to make “enough” money, it is more related to not being able to manage money properly.

When people cannot manage their money, they will always be in financial trouble, for example they will not be able to pay their bills, their debt will increase, and they cannot enjoy life.

The reason you are always in financial trouble is not because you don’t have enough money, it is because you don’t know how to spend your money. That’s the reason you should make a budget and stay within your budget.

Budgeting means you know how much you can spend for each category. For example, if you earn just $2000 in a month, you cannot spend $1500 on an iPhone. However, budgeting does not mean you will have to sacrifice your desires. Budgeting will tech you to save $100 per month so that you can buy an iPhone by the end of 15th month.

 

[Mika]

In order to manage your personal finance, you need skills to manage cash flow. Cash flow management means, managing your income and expenses. Budgeting means planning your money, which involves making an estimation of income and expenses. A budget is normally made before you spend money. Let's say you will receive your salary on the 1st of every month. On the last day of the month, you start planning how you are going o spend your money. That is budgeting. In order to improve your personal finance, budgeting is very important, however, if you cannot start within your budget, there is no point in creating the budget. Therefore, if you make a budget, you should stay within that budget. If money for a certain category fell short and certain categories had a surplus, you can manage the short funds and surplus funds in the coming month. Your budget should also have a category for saving and investment.