BudgetingThis is the part 4 of the series “Masterize in Financial Planning through Football”Budgeting is a common term you are aware and hearing at the beginning of financial planning. As you aware, budgeting is must to find out your cash flow as necessary and unnecessary expenses in each month.Through a proper budgeting, you are being able to reduce unnecessary expenses and utilize that money for your financial planning. Read further ……
What is budgeting?Budgeting is a responsible money spending plan. The purpose of a budget is to stop over-spending by monitoring your cash flow, to stop the resulting debt from piling up into an unmanageable mess.We are coming to our football team. All of us heard about the team selection process. The original team members to play the game will be 11 with 3 extra backup players. Before finalizing these final 15 members, the selection board will make a list of all probable individuals to consider them to the team. This fist probability list would have 25 or more members. The final 11 players and 3 extra players will be selected among from them.Budgeting process working in the same way. Through proper budgeting you are planning for how much money you have and how much money you spend.
A well budgeting have four must follow steps: plan, track, compare, and adjust.
Through budgeting you will be able to accomplish the following:
– Categorize your obligations and spending habits.- Monitor and pay monthly bills such as mortgage, insurance, utilities, car payment, etc. in a systematic way.- Set up a manageable budget, a savings or retirement plan, and reduce or eliminate debt.
– Track and manage bank accounts, credit cards, and investments.
The success of budgeting is the ability to identify the necessary and unnecessary expenses that is occurring to an individual.
Some of the best examples for necessary expenses are:
1. Paying of utility bills2. Paying of Home Loans3. Buying daily groceries
Below is the example for unnecessary expenses:
1. Eating out2. Movies and tournaments …3. Weekly shopping etc…Both the above groups are some of them in each category. Unnecessary expenses vary upon individual. If you are serious with your personal financial planning, you should have to prepare monthly budget just like how the football team selection process going on. You have to identify your unnecessary expenses and expel them to prevent the flow of your money through the wrong way.The other advantages of budgeting is, it is not only help you to cut down your monthly un necessary expenses as well as, you can re-deploy such saved amount to the proper investing instruments to add value to your personal financial plan.So prepare and have a very good budget to utilize your money only for necessary purposes and to avoid the debt clouds on you by spending the money for unwanted items.
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