Personal finance

How to budget: Your first step to financial security

Most of us don’t feel the requirement of a fully structured out budget, when it comes to securing our finances.

But, without a budget our finance can turn into a wasteland within a little time, independent of how much we earn.

It’s not that you can’t work without a budget, it’s just that reducing the money mess, and tightening our financial security, is the concern. And, a well organized finance does require a budget to function. It’s like the Random Access Memory (RAM) of finances.
More RAM means more power, it’s just that simple a fact.

However, most of us remain ignorant of personal financial security, and can never realize how essential a budget is for protecting our finances.

Money is all about calculations, and budget will give a nice infrastructure to hold enough room for fitting in all the numbers with proper detail and predictions.

Welcome to the world of Budgeting. Here is a budget guide that will indulge you to go for at least one of the few budgeting strategies, discussed here.
Make sure, you are not neglecting the little pain you might have to take, so as to reap real profits in the future.

You deserve this little brain work and a slight struggle, if you are aiming to achieve financial happiness. Let’s get that slight sweat running then, to gain some huge benefits with the effects of budgeting, for financial protection.

Your income influences your budget to a great extent-
Form your budget accordingly:

Your income restricts spending.

But, if you have the mentality to rely on debts, every time you run out of debit cash, then that’s a very bad habit, and you need to get rid of such a mindset, as soon as possible.

So, if your income is low, then you are better off working out a Bare-Bones-Budget, or a Lite Budget.

In such a budget, you won’t be including much of luxury expenses, rather you will be concentrating only on normal day to day expenses, and take care of other basic monthly necessities, or financial responsibilities.

That’s what a Bare Bones Budget sounds like. And, it’s a common sense that you can’t have all the joy in life if your income is low. Under those conditions, a lite budget experience might be the most appropriate one for you.

Not only this, but also you can use this budget type for staying debt free foreverIn this post I will be taking the majority of consumers into account, and will hence plan out a budget that will keep us more secure financially, rather than meeting luxury requirements.

Get yourself the Zero-Based-Budget, or the big view Budget:

This is more of a customized form of budgeting, than just following a fixed budget format blindly.

Financial stability or security is brought by debt-less-ness, and an ever growing savings profile. This customized budgeting strategy, the so called Zero Based budget, helps you achieve these major goals, by limiting your ‘out of hand’ expenses, or other luxury purchases and decisions.

First thing to do here, is take a look at your last month’s finance list. See your expense list, and your spending profile overall.

Based on the past month’s review, you will be making a predicted expense list for this month.
Each and every expense should be listed one by one, as per their level of priority.

Those expenses, that you can’t neglect or omit at any cost, will be at the top of the list.
These include mortgage payments, debt payments, day care cost, other fees regarding subscriptions, penalties, or anything whose number you can’t change as per your want.

Those that are discretionary and flexible will usually take up the middle part of the list. Such expenses are indicated by utility bills, grocery and food costs, transportation costs, and anything else that can be manipulated a bit, whenever you want.

At the last, appears miscellaneous and/or luxury expenses, triggered by your wishes or impulsive spending behaviour.
It is mandatory to keep a check on this part, and avoid these expenses as much as you can, for improving your financial security.

And finally, there comes savings. In this whole list of expenses, don’t forget to include your monthly savings number. This should appear at the top with the priority expenses. Each month, you should at least try to save a minimum amount, if not something huge.

Once the list is complete, write dedicated dollar values beside each of the expenses, and add up the total expenditure amount for the month.

Zero Based Budget is interested in bringing your total income minus total expense to zero. If your total expense amount cancels out your total income, by giving you a neutral zero, after taking care of all the expenses, then you have successfully accomplished the budget.

Else, check your budget list multiple times, add or subtract expenses sensibly, and equal it out.

Clear your debts, to give your financial security the final touch:

All is well, if you don’t have debts.

Financial security is not solely about monetary freedom, it also ensures mental peace. Trust me you definitely want a good credit score, a nice net worth, relief from debt collectors, and a happy retirement portfolio.

And, if you are not having debt riddance in your mind, then all these struggles for financial security will mean nothing.

Hence, in your budget, make space for the debt payments, and if possible, cut down on other discretionary expenses, and focus on hyper debt payments.

Now, that’s all I could include over here. To take this conversation a bit further, leave your response down below, and start the discussion!

All the luck for a financially secured future, up ahead!


Dmitry Savransky
Dmitry Savransky

Chief Editor

Dmitry graduated from National Technical University of Ukraine ‘Kyiv Polytechnic Institute’. He joined PocketGuard at the end of 2021 as a Head of Product with strong background in fintech. Dmitry i...

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