Managing Personal Budget

Written by: smm

on: 13/02/2023

A personal budget is what enables you to keep track of your expenses and earnings. This is a must-have for everybody as it provides a clear picture of your financial situation. 

To learn how to manage your personal budget, it’s not enough just to stay disciplined, and have the right information. With this in mind, we will be sharing the things you will need to budget like a pro. 

Here are the reasons why you need to keep your finances in check:

— Control

Let’s imagine that a great chunk of your money goes towards impulsive—and frankly useless—purchases. By being in control of your personal budget, you will be able to see what is happening and give your next purchase a good thought. 

— Savings

The person who spends less can save more. And you will have that opportunity as well.

— Understanding where you stand financially 

Budgeting helps you understand whether you need to start saving or look for additional sources of income. 

— Confidence in the future  

When you know how much money you have, you can manage it properly so that you feel secure and at ease throughout the entire calendar month. 

— Achieving goals  

First, you set your goals and save money for them, and then you get what you want. 

Key ways to manage personal budget:

Approach No 1

This one is a no-brainer. What you do is write down your daily expenses for a month. List up to 12 categories of your expenditures and break them down into regular expenses, i.e. food, utility bills, clothes, shoes, etc. Another group must include emotional expenses, such as entertainment, trips, charity, gizmos, and others. By the end of the month, calculate how much money you have spent within each group. 

Approach No 2

This method is somewhat similar to the previous one, except you will also have to track down your earnings, not just your expenses. Break them down into several categories, i.e. salary, side jobs, interests on your savings accounts, etc.

Approach No 3

This is your best bet if you are someone who doesn’t need to save money but rather wishes to keep an eye on their account balance. At the beginning of the month, write down your assets, i.e. house, car, how much money you have in your accounts, and in cash, etc. Get back to these notes in a month, and repeat what you did before. That way you can compare the figure. This is how you can identify and fix any possible problems before it’s too late.  

Approach No 4

At its core, this method is similar to the third one with a couple of new rules. Aside from writing down your earnings and expenditures, you will need to categorize all of your accounts—credit cards, cash, investments, and currencies, i.e. U.S. dollars, euro, and hryvnia. You will also need to keep track of internal and external transactions and make a property reevaluation. 

Regardless of the approach you choose to manage your finances, it’s important to pick the right mobile app that would have a synchronization feature for your bank statements. Otherwise, you can always opt for regular tables, like those in Microsoft Excel.