Here is a little summary of all we have discussed so far on budgeting:
Budgeting is the process of purposeful planning of how money should be spent, which can help predict the expenses and income of a family, group, individual, business entity, or government. Budgeting is important for insightful decision-making and effective cost reduction, to ultimately increase profits.
A budget can be divided into five main types;
Personal budget: monthly earnings, and expenses of individuals or families.
Corporate budget: a statement of cash transactions and capital maintenance.
Financial budget: the object of value possessed, liability, and shareholders ‘inclusion, short and long-term financial goals.
Cash budget: a statement of cash transactions prepared in advance; Flexible budget, changes in expenses and costs.
Budgeting helps achieve short- and long-term goals make insightful decisions, and helps to avoid a cash crunch. Budgeting also helps track finances and prevent overspending and using up emergency funds.
In preparing a budget spreadsheet using a google sheet here are some important things to bear in mind:
Income and expense categories should be created.
Decisions on what budget period to use must be made.
Use of simple formulas that will help minimize time commitment and prevent errors along the way should be employed.
Lastly, budget numbers must be inputted.
For effective cost management and cost savings, there is a need for recording all expenses made, save more- spend less, set financial priorities, and make savings automatic, which could be done by creating a Herconomy Savings account, setting up Vault Easy save, and enjoy a huge interest rate on your savings. Click here to download the Herconomy app for Android and here to download the Herconomy app for iOS
CONCLUSION
Budgeting is important for making decisions and reducing costs effectively which ends up increasing profits/savings. It helps achieve short and long-term goals and it aids in making insightful decisions. A budget helps track all financial transactions made and keeps you grounded in the planned course.
RECOMMENDATION
There is a “50-30-20 rule that recommends spending 50% of earnings (after-tax deductions) on necessities like paying house rents, buying foodstuff, paying school bills, etc. Of the rest, the rule recommends spending 30% on leisure like treating one’s self to a nice weekend retreat, and 20% on savings.
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