{"id":2783,"date":"2023-02-07T12:48:01","date_gmt":"2023-02-07T11:48:01","guid":{"rendered":"https:\/\/vtpass.com\/blog\/?p=2783"},"modified":"2023-02-07T12:48:01","modified_gmt":"2023-02-07T11:48:01","slug":"budgeting-for-beginners","status":"publish","type":"post","link":"https:\/\/vtpass.com\/blog\/index.php\/2023\/02\/07\/budgeting-for-beginners\/","title":{"rendered":"BUDGETING FOR BEGINNERS"},"content":{"rendered":"\n
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INTRODUCTION<\/strong> TO BUDGETING<\/h2>\n\n\n\n

Budgeting is the first step to financial success. Oftentimes, we\u2019ve heard people talk about how a certain commodity isn\u2019t in their budget, and so they can\u2019t afford to buy it. This drives the quest to fully grasp the concept of this economic terminology. Every individual’s goal is to be able to afford whatever he wants. In understanding people\u2019s attitudes toward financial goals, the following assumptions about humans are true. This general attitude guides their approach to making and spending money.<\/p>\n\n\n\n

ASSUMPTIONS<\/strong> THAT AFFECTS BUDGETING<\/h2>\n\n\n\n
  1. That man is a rational and social being. This indicates that humans possess the mental capacity to reason and think, which enables us to perform a variety of cognitive tasks such as concept formulation, assessment of ideas, and reasoning.\u00a0<\/li>
  2. A need is a requirement for functioning and existing. Wants are anything that enhances the quality of your life.<\/li>
  3. A person\u2019s income must be greater than his expenses. If the reverse is the case, it is highly detrimental to the financial well-being of the individual.\u00a0\u00a0\u00a0<\/li>
  4. A person must instill healthy habits to get the best out of budgeting. <\/li><\/ol>\n\n\n\n

    PERSONAL INCOME VS EXPENSES<\/strong> IN BUDGETING<\/h2>\n\n\n\n

    This concept of personal income can be defined as all the earnings an individual makes over a period of time. Personal income comes from salaries, investments, and other assets the individual has acquired over time. Income generally refers to the value or sum an individual and business earn in exchange for their labor and goods. <\/p>\n\n\n\n

    There are basic expenses that an individual must pay at all times, and these are called cost of living expenses. The cost of living expenses might differ from person to person depending on lifestyle, choices, and family size. The common cost of living expenses includes feeding, rent, clothing, taxes, education, transportation, etc.\u00a0<\/p>\n\n\n\n

    To further break these two concepts into bits, income is money coming in, and expenses are money going out. Every individual’s goal should therefore be to maximize income while minimizing expenditure. Understanding these two concepts helps individuals project their financial standing and plan toward their goals. <\/p>\n\n\n\n

    WHY DO I NEED TO PLAN MY \u00a0 FINANCE?\u00a0<\/strong><\/h2>\n\n\n\n

    Personal finance is mostly relative to the individual\u2019s mindset, choices, and lifestyle. Certain individuals have no financial projections, nor do they have goals.\u00a0 Having a financial plan is just like intending to have a fit body, and then taking steps to cut down on unnecessary junk food and registering at the local gym. In the same way, you plan for your social lifestyle, and physical body, this same energy should be directed toward your finances.\u00a0<\/p>\n\n\n\n

    Financial planning is a methodical process whereby a person makes the most of their financial resources by managing their money wisely to best meet their financial goals and objectives. We all know the health implications of eating too much, so we pay attention to what we eat and how we eat it. Likewise, you should also pay attention to the implications of spending more than you earn. A financial heart attack, including debt, bankruptcy, and a lifetime of bad credit, may result from continuously spending more than you make. A personal financial plan functions as a financial diet plan.<\/p>\n\n\n\n

    WHAT THEN IS BUDGETING?<\/strong><\/h2>\n\n\n\n

    A budget<\/a> is an economic concept; governments, companies, and individuals use budgets to estimate their income and outlays for a given period. Budgets are essentially plans for a specific period and are known to increase the success of any financial endeavor significantly.\u00a0 <\/p>\n\n\n\n

    The objective of a personal budget is to minimize expenses and maximize savings. You can use the additional money you save by reducing your less-needed expenditure and raising your savings rate toward significant long-term financial objectives. Budgeting is essential if you want to control your spending, be ready for unforeseen circumstances, and be able to afford your needs without falling into debt. It doesn\u2019t have to be tedious, you don\u2019t have to be brilliant at arithmetic, and keeping track of your income and expenses doesn\u2019t mean you can\u2019t buy items that you want. It simply means that you will be more aware of where your money is going and that you will be more in control of your finances. <\/p>\n\n\n\n

    The concept of budgeting is not to make you feel bad after spending. The goal of budgeting is to ensure you can save some money each month, ideally at least 10% of your total income, or at the very least, to ensure you are not spending more than you bring in. <\/p>\n\n\n\n

    . To successfully create a personal budget, you must first meticulously track your income and expenses. Making a budget is simple once you keep track of your money. Your expenditure is far more difficult to identify or track. You may start the crucial process of classifying all your income and spending once you have a complete list of all your bank deposits, outgoing checks, and transfers.<\/p>\n\n\n\n

    Having the right attitude toward money is the backbone of having a budget.\u00a0<\/p>\n\n\n\n

    CREATING A BUDGET<\/strong><\/h2>\n\n\n\n

    The following steps will take you to a healthy financial budget   <\/p>\n\n\n\n