Principles of Personal BudgetingBy Toby Tunwase
Budgeting is not only for nations and organizations; individuals are also supposed to budget as it helps a great deal with maintaining personal financial accountability and growth. Like any other budgeting, certain principles are vital to ensuring that a personal budget is well prepared. The principles include:
- Be aware of your Income.
Before you make any budget, you must be aware of how much money you make or expect to make. This will guide you in making expenditure choices on your budget.
- Spend Less than you earn:
This principle ensures that you have some money saved or invested towards the future and that you don’t spend all your Income immediately. This prevents you from living from paycheck to paycheck, but to be able to grow wealth. Therefore, when making the budget list, ensure that your expenditures do not surpass your Income.
- Plan for Emergencies
Emergencies will always come up in life, and one way to be ready for them is to have some money saved up for them. This can be done by setting up an emergency fund or ensuring that you have insurance coverage. Your budget list should have some money set aside to spend in case an emergency comes up.
- Don’t Borrow what you cannot repay.
Borrowing money in itself is not a bad thing and can be accounted for in a budget. However, ensure that you can repay whatever you borrowed without hurting your entire financial map.
Budgeting guarantees prudent use of resources, and these principles guarantee wise budgeting.