Easy steps for a spending plan and a budget

Spending & Budget Plan

Spending & Budget Plan

It is a very common phenomenon that many people do create their own budget and spending plans to save on your expenses and to keep a track of the same, but everyone swears to stick to it. Many of the budgets fail as they are taken as a part of our general financial planning but when we take our spending plan a rationale, things change significantly. While preparing a budget helps in analysing the monthly expenditure and the income, a spending plan will give us a clear idea of the areas of expenditure.

Budgeting can be quite challenging at the initial stages as you need to make a note of even the smallest expenses and maintain a track of it. Once you are aware as to what is being paid on the essentials then comes the time to pen down the personal expenditure for the coming or the next month. This is needed as we can cut down on unnecessary expenditure when we actually know where the cash is going and where it is needed the most. For example, you can plan well ahead for a occasion or a festival when we have our budget planned. Once these are taken care, it is also important to set some practical goals. Let us have a step by step look for making a proper budget and a spending plan.

Track the spending: To know how much you are spending on what is very important. Make a note of all the expenses for the day and also make this a daily practise which can be done every day before going to bed. In this way you can know the unwanted expenses.

Categorise the spending: Once a month passes by, look back at your list of spending and try and assign a general category to each and every item. Some things are general like rent, payments for car or mortgage but the others can be grouped into categories like groceries, clothing, medical etc. It is understood that miscellaneous is another category. This will help you to analyse as to where there is a major spending.

Also look out for things which might have been left out and need to be present. There also need to be space for some of the irregular spending like memberships etc.

Making your spending plan: Once you’re good with the categories, do put them on a budget form. Most of such forms are also available online. Total the expense for each category and this can be entered as the planned spending for the coming month. Now add up everything and subtract the same from the next month’s income and see if there is any money left over. If there is any money left over, then that can be allocated to saving or other important expenditure. If you have come short of the income, then it is time to recheck the budget form and it is time to cut the expenditure somewhere.

It is always good to make a new budget every month and also be prepared to make the necessary changes in the spending plan.

Incentive Budgeting – What’s the difference?

Incentive Budgeting

Incentive Budgeting

In this modern world people are always out on a spending spree, regardless of the fact that they can not even afford it. It has become a favorite past time. But the thing that most people forget is that they are not even in a financial position to spend it. It has become a way of life for people to spend more that they can afford to do and this has led to many debt problems in UK and around the world in general.

When people spend more then their earnings they fail to payback and then they try looking for help. The help may come from their family and friends while some seek the help of different institutions that facilitate in lending money.

This bad habit of spending more than your earn has led lots of people into many debt problems. Making a workable budget is more easy and important to you in a lots of ways, than to spend all your incoming of a month without saving anything for the month .

Banks and institutions that deal in lending money are usual happy with the overall debt problem. And they built the risk factor of bad debts into their interest to ensure overall profitability.

Banks have made the credit cards easily accessible to the common man that it has sent him on a wild shopping spree. The incentives they give sure look attractive but the hidden truth is how can these people afford to payback their credit cards debt and interest rate when they can’t even afford to pay for their daily expenditure.

This is due to lack of budgeting and over spending on the part of individual. What these people forget is from where they are going to get the money to repay. Always remember that one debt leads to another debt, it is not good to use a debt to finance another debt. The best way to get out of debt on your own is to sit down and start planning your income in other not to over spend you monthly income, below are some incentives to budget your monthly income, I hope it helps.

Incentives to budgeting money:

•    Motivation is needs to make people start taking proper measures to save money as nobody can become rich by spending more than is monthly income. Wealth grows from the surplus money that is left behind at the end of the month after your monthly expenditure. The motivation of becoming independent will surely make you stick and plan a proper budget.

•    Another important thing that can motivate you is the knowledge that you can only save money and has a chance of growing your wealth if you avoid the unnecessary things and stick to your needs.

•    Avoid peer pressure as this is the main cause that leads us to unwise spending. If you can just ignore this then you surely can save a lot of money and plus be more relaxed.

Don’t over budget yourself and stick to your spending plan and cost at all time. We are in the worse recession season and its time to take heed and avoid over expenditure. In planning a budget a specific amount is kept for maintaining the household. And we have to create a perfect plan for our family so that we can afford the essentials of life. Easy living is by planning a realistic budget and sticking to it.

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