Part 1: What Is Budgeting?
As mentioned previously, budgeting is something that we should all be doing in our daily lives. As important as it is, there are millions of people out there who do not understand what actually is budgeting and what it involves. Budgeting is not something which you will be able to understand as soon as you hear about it. It is filled with multiple different pieces of important information which you need to learn and apply before mastering the processes.
What is a budget?
Typically, a budget is an important, detailed list of planned expenses and incomings to and from your bank accounts. This list enables you to figure out a plan which will let you get a better understanding of your finances and how to manage them. Once you have created your list you will then be able to move forward, using your budget. This will enable you to gain a better relationship with your finances in daily life, helping you save and spend efficiently.
What does a budget look like?
Everybody’s budget will look completely different as nobody has the same spending habits, makes the same purchases and has the same income all at the same time. So, before you begin to compare a budget with your friends or family please bear this in mind. Your budget can be as simple or as complex as you want it to be, as long as you are able to easily understand it that is all that matters, along with holding all the information necessary.
What is the process of budgeting?
Budgeting is the process of separating your finances to guide you and your spending. The process in which each individual takes will depend on the person and their finances. Once you have embarked on your budgeting journey you will be able to take the time to figure out whether or not to but you have chosen is the right one for you as well as reflect and take an overview on your budget so far.
Most budgets begin with the realisation that you should begin to budget. Then comes the search for budgets which will suit you, followed by applying your finances to your chosen process. After this has happened for a few months you will then take the time to reflect. If it has not worked, you will restart the process and begin the cycle again.