Monday, June 25, 2012

Personal Budgeting Concept

To manage the cash flow, some people create a budget. The budget helps people to track where the money go and where the money come from. Most government, municipal, organization also create budget to manage the organization finance. They afraid they missed some spending or income.
Creating a budget is not difficult. You need to understand the budget concept. Here are some concept about budget:

Supposedly the budget has purpose. The creator must know what the budget for. Most budget are made for living frugal. He or she should recognize the income and the spending.
The purpose is a corner stone to create the budgeting.We can allocate the income to some spending post. For example, we want go outside. We should allocate our income for vacation that needs thousand dollars. The creator can set on how long we plan to vacation. Perhaps we want go to vacation next three years.
The budget must be simple and you know what the mean of your budget. You can create the budget that different with other people as long you understand about it.
Use the spreadsheet software such as Microsoft excel or open source spreadsheet. Write your revenue items on the top of the spreadsheet and sum of all revenue. You can write the spending below or the following the revenue. Compute all of spending. Last, Diminish the revenue with the spending.
A budget must not be straight. It must be flexible to pay the unexpected spending. For example, we have set the cereal spending a thousand dollars a month. Unfortunately, the cereal price increases 10 percent. Reduce our cereal spending is not reliable you and your family will starve. That is why you have to pay the cereal and use money from other post such as leisure, and saving. At the end of the month, you can evaluate the cereal spending.
Budgeting for irregular income
Some people has irregular income that they can get anytime. The freelancer work usually generate irregular income. They cannot predict how much money monthly. Sometimes they do not get any money but sometimes they get so much money. The budget also consider irregular income that can balance the spending.
For freelancer, they can compute the average of income in a year. Sum of all revenue in a year and then divided with twelves ( the amount month in a year).

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