BUDGETING– Part 1
Budgeting is simply creating a plan to spend money.
This plan allows you to know if you have enough money to do what you like to do or need to do.
It is also balancing your expenses with your incomes.
This is a collection of thoughts from the HOUSE OF UPBEAT HUB on the concept of budgeting. In this article, I am going to make this topic as easy as possible to comprehend.
The basic concept of budgeting is to estimate expected income and expenses, knowing your income sources and expenses. First is knowing your what kind of income you have.Then doing the actual budget which is the planning- more like cutting your coat according to your size. Lol.
Budgeting may depend on your income at first and having a scale of preference.
According to the thoughts from the Hub; By budget, you must list your important needs from the highest priority to the lowest. Income should be splited into 3parts to indicate your scale of preference . Use two parts to take care of these important things.
Also you should know the kind of budget you are drawing up. Is it a personal budget, business budget etc?
Classifications of budget
- Based on Time.
- Based on Conditions.
- Based on Function.
- Based on Flexibility.
Based on Time
Long term budget– planning for period of 5 to 10years.
Short term budget– usually for a year.
Based on Conditions
Basic budget-this is for unaltered use over a long period.
Current budget-for use over a short period based on current situations.
Based on Function
Master budget-this consist of several separate but interdependent budgets. Usually shows overall plan for the budget period.
Functional budget-this is prepared in respect of various functions performed in a business.
Based on Flexibility
Fixed budget-it is designed to remain unchanged irrespective of level of activity obtained.
Flexible budget-it changes by the level of activity attained.
They are all dependent on if the cost is variable or fixed.
Sometimes it comes like this
A Rough Sketch (List)
My Debt (if any, but try stay outta this zone)
My Spendings, splatted further to:
Part 2 coming soon
Update comes with raw questions/answers that were asked in the Hub. In the meantime, let us know the few tips you know when it comes to budgeting effectively.
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