SET A BUDGET

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Great mind,
I want to salute everyone and celebrate all of us for making it to this week 28 challenge and the first edition for that matter.
The focus of this edition I really like it and I feel so excited to share some of thought to you all. I encourage you all to read it gradually and possibly pick a piece that could transformed you just like me here.

What is a budget?

At first when I saw this, I said to myself I didn't study accounting why this? I was imagining how an inorganic chemist could share something about budget. Hmmm I think I may not have the accurate accounting terms to use but I will attempt this based on my understanding and life experiences I have passed through.

• Budget can be seen as a projection or estimation of spending at a particular time.
  Budget is a process in which a plan is created that contains details how money is spent.
  Budget is a framework or template of the financial life of an individual which consist of the expenses and the income over a period of time which can be evaluated when needed to ensure that the financial target is made.
  I would finally say as a chemist that budget is an apparatus used to manage finances i.e income, expenses, financial goals, and every other thing that has to do with money.

Types of Budget

Remember as I said earlier, I'm just sharing this as a lay man.
I want to classify budget into three.

• Additional Budget; This kind of budget is derived from what was budgeted previous year and a percentage is either added or subtracted in order to have the present budget. The previous budget gives a clear picture on the present one. All that is done is to add or reduce some few things to cushion the present effect on the budget.
• The second kind of budget is what I called Specific Budget: This kind of budget is done with certain consideration of things in view. An individual does not cover the entire financial need rather resolved to go for the one that would give maximum satisfaction. Most students engage in this kind of budget.
• The third kind of budget is what I called General budget. This normally captures all the possible expenses and income that is envisioned over a particular period of time. This kind of budget is bulky and is accessed yearly because of the components it carries.

How can you make budget?

In order to have a good, superb and simple budget the following should be considered.

• The first thing is to ascertain your Gross income. This is like the foundation laying for any budget. You must calculate your total income that would help to plan the budget. You can't plan outside what comes in as income.
• The second point is to evaluate and know what you spend either income or expenses. You need to know your cash flow channel and the ways you normally spend it.
• The next thing is to set a very good financial goal. Make sure is specific, measurable, Attainable, Reliable and has a time frame so that it can be monitored. Any goal that isn't clear don't go for it.
• Haven gotten your goals or objectives, you're good to go with the plan. Plan strategically. This is the major work in the budget because the plan has to cover everything in clear terms.
• Another thing is to make necessary adjustments for all the projected finances are captured in the budget.
  And finally
• Always review and access the budget. It could be monthly or yearly just it pleases you and also at your convenience.

What are the importance of Budget?

If a purpose of a thing is not known certainly abuse is inevitable. I will briefly share some significance of budget that I found relevant which are...

• Budget helps to control or manage expenses
• Budget helps one to save money.
• It also help to create financial satisfaction or contentment.
• It helps one to avoid debt.
• Budget helps in managing marriages and family at large.
• Budget enables one to attain or achieve financial goals at a specific period of time.
• Budget makes an individual to be well organized financially and other wise.
• Budget plays a vital role in the life of students in managing their expenditure.
• For quick and emergency response budget helps a lot.
• As a hiver, budget too plays a vital role.

My personal experience in using budget.

Let make this statement, when you are a budget minded person you may be mistakenly considered as stingy. Although some stingy people don't even make budget at all.
I used to make a yearly financial plan; break it into months, weekly etc to enable me manage my Both income and expenses. I had the privileged to give an input in making budget for an organization where I worked before. It really guided us then to curtail contingencies and have good financial year.

I have also implored similar strategy in managing my family which the positive impact is indelible. Budgeting has really helped in all facet of my endeavors.

CONCLUSION

One of the best management tool is budget. Try and have budget for your life, family, organization etc today. To me the importance of Budget can't be overemphasized.

thanks for visiting my blog and all comments appreciated.