Budgeting

The Dreaded B Word… BUDGET

A budget is a financial plan for a defined period. It may also include planned sales volumes and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. Companies, governments, families and other organizations use it to express strategic plans of activities or events in measurable terms.

A budget is the sum of money allocated for a particular purpose and the summary of intended expenditures along with proposals for how to meet them. It may include a budget surplus, providing money for use at a future time, or a deficit in which expenses exceed income.

The Family Budget

A personal budget or family budget is a finance plan that allocates future personal income towards expenses, savings and debt repayment. Past spending and personal debt are considered when creating a personal budget. There are several methods and tools available for creating, using and adjusting a personal budget. For example, jobs are an income source, while bills and rent payments are expenses. A third category (other than income and expenses) may be assets (such as property, investments or other savings or value) representing a potential reserve for funds in case of budget shortfalls.

The best advice to becoming wealthy is to keep expenditures down even when our earning power increases. Many of us have the habit of spending more as we earn more and it’s not unusual to see someone splurging and suddenly their expenses go up as they start earning more.

There are many informational sites and software available for use in personal and family problems. I have started using the One Year Budget.

The One Year Budget

When it comes to budgeting, people tend to think short term–budgeting week by week, paycheck by paycheck, or month by month. This is great for getting a close look at your finances and making sure that you stay on track from month to month. But when it comes to setting and reaching financial goals, there’s a much better option: the one year budget.

Budgeting for a year at a time is all about the big picture. It really shows you what you and your money could accomplish in a year if you stick to your spending plan. Having a bird’s eye view of your money is incredibly motivating because the progress isn’t theoretical anymore.

A one-year budget gives you hard numbers that you can see. And when you tie your budget to your life goals–which is what a year-long budget is all about–it becomes a lot easier to stick to because you can immediately see how it affects the rest of your year.

The best part about budgeting for a year at once is that it’s a whole lot simpler than piecemeal month-by-month budgets. You use your prior months as a reference and you can forecast future months all at the same time. Here’s how you create a one year budget and plan for your best financial year ever.

Creating a one-year budget

🌱 STEP 1. PRE-WORK

🌱 STEP 2. ADD YOUR INCOME TO YOUR ONE-YEAR BUDGET.

🌱 STEP 3. ADD YOUR MANDATORY MONTHLY EXPENSES TO YOUR ONE-YEAR BUDGET.

🌱 STEP 4. CALCULATE YOUR MONTHLY BUDGET SURPLUS.

🌱 STEP 5. LIST ALL OF YOUR FINANCIAL GOALS AND HOW MUCH MONEY YOU NEED FOR EACH.

🌱 STEP 6. CHOOSE YOUR FOCUS GOALS AND START ADDING THEM TO YOUR BUDGET.

🌱 STEP 7: ADD YOU LIFESTYLE SPENDING TO YOUR ONE-YEAR BUDGET.

🌱 STEP 9: ADJUST YOUR BUDGET AS YOU GO ALONG.

Note:

Because you’re going to be tweaking numbers as you go, you’re not going to want to keep your one-year budget on paper. You’ll need to use a spreadsheet. OneBigHappyLife provide a more detailed breakdown of each step and an awesome free one year budget template that you can use.

A Final Note

I have been using the one-year budget method by OneBigHappyLife for a few months now and it is really helping with my finances. It’s just good to see your plan for the year and it helps with goal setting and lifestyle choices.

I hope you think so too. Drop me a comment on the contact section and tell me your thoughts.