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How to detect the changes required while preparing the personal budget?
Posted on: 29/Jan/2018 4:29:48 PM
Just like any administration (government or industry), the budget is essential for the individual family as well in order to administer the monthly expenses and also secure the aspect of the saving for the future.
However, if there is a situation where you find cash-strapped before the end of the month or divert the expenses to be made from one issue to another, you definitely need to change your budget.
If running short of money by the middle of the month itself, it gives away that you have miscalculated in your budget. This may be due to overlooking the exact details of the required monthly expenses and deciding on an empirical basis. You might have ignores some avenues of minor but necessary expenses. So, it is better to review in detail the monthly expenses aspect while preparing the budget.
If there is a situation where there is no scope for saving even after following the budget strictly, the situation warrants, that you might review the various expenses and take actions to cut them. For example, you may consider that the monthly expenses such as the telephone bill, cable TV, and internet connection as very essential. However, there is a scope for reduction of these expenses. You may consider the changing on the telephone-plan and the cable TV-plan.
The enthusiasm you had while making the budget may evaporate even as you start following it – this may lead to monthly cash-crunch situations. It is not mandatory that you might need to give up some of your preferences to keep the budget. For example, if you are interested in weekend movies, go ahead while picking up some other avenues which are in your non-priority list may be reduced.
There are 2 important factors while strictly following the budget. One is the emergency funds. Another is known as ‘money-cushion’ or the excess money. Note that the 2 are different. Emergency funds take care of the unexpected expenses. Money-cushion is the source which helps manage any essential additional expenses in the budget made.
While reviewing the monthly expense avenues, one may tend to overlook some important expenses such as insurance coverage premium, the education term-fees, the annual subscription which do not fall into the monthly category. If these items are taken note of and included while making the budget, the difficulties can be overcome to an extent.
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