Dissecting the budgeting and spending process

Budgeting as a process is easy to dissect but tough to follow.

09:05 28 January 2014

When you have a lot of expenses, it is important to take it easy before taking the next step. If you are to achieve financial success, it is important that you take planning very seriously. This is where budgeting comes in.

 

Keys to successful budgeting

So if you are going to effectively craft a budget, it is important that you pay attention to the following steps.

 

• You have to know what you earn

• You have to know what you spend

• You have to know what your debt is

• You have to know what you have in assets

 

The key to ensure that your budget you craft is effective is to spend less and earn more. Debt comes in when you spend more and earn the same as you do year in and year out. To counter this it is important that you exercise envelope budgeting.

 

Trimming the ‘fat’

So you are looking to cut down on spending? Where do you start first? Budgeting should not be done unsystematically. Know your priorities. Recurrent priority expenditure should be the first one to take care of on your list.

 

This step is crucial as it allows you to ruthlessly eliminate waste and ensure that you are successful in saving.

 

Don’t Spend All You Earn In The First Week

As a rule of thumb, you should ensure that you let your salary cool down before spending it.

 

In order to curtail overspending on certain items, it is important to take a step back. Think about setting things straight. Start with budgeting. If sitting down and crafting a budget was a tall order for you then, you should ensure that you do so now. It is not as hard as you think. Just sit down, grab a pen and paper and start jotting down what you have.