Personal Finance Budgeting

If you want to build up your own wealth, it is important that you understand the idea of personal finance budgeting. In fact, it is extremely important for you to think about your personal budget so that you can really build your wealth gradually.

 

Steps of Personal Finance Budgeting

There are a few steps you must take in order to have a good personal budget. You must follow all these steps if you are really serious about this issue.

First of all, you will need to know your current financial situation. As a result, you should try to take a look at all the assets you have. You will need to take a look at your bank accounts. And you will also need to see if there are any debts you will need to settle. Of course you will also need to know your monthly income. This include all the salary, interest and so on you can get each month.

The second step of personal finance budgeting is to understand your own spending habit. It will be a good idea for you to take out all the bills to have a looks for. In fact, you will also need to have a log book to see how you spend every day. You have to write down how much you have spent on your meals and transportation. You will need to write down all the spending you make during the day.

Now, you should further investigate your expenses. You will need to understand what the fixed expenses are. For example, the rent of your flat is a fixed expense. You will need to settle a fixed amount every month. You can also treat the loan payment or credit card payment fixed expenses.

At the same time, the variable expenses will affect your personal finance budgeting a lot. For instance, your expenses on having dinner with your friends will be a variable expense. Money spent on entertainment will also fall into this category.

You will then try to see if your monthly income matches your monthly expenses. Remember, you should allocate part (usually 5 to 8%) of your monthly income for saving so that you can build your wealth. So, you will need to see if your income (minus saving) can cover all the expenses.

If it is not possible for the income to cover all the expenses, it is important that you cut the variable expenses. You may need to cut down the frequency of eating out. You may need to try to spend less on watching movies.

The ultimate goal is that you will need to have a balance budget. After you have repaid all the debts, you can save even more money. With this idea of personal finance budget, it will not be difficult for you to build your wealth!