WE have just entered into December, 2020 and now are left with only counting days before we welcome the New Year. So the planning for the next year has to start so that once you are in 2021, you have the month wise budget for the whole year.
‘BUDGET’ for many people is quite a dreadful word. Once they hear the sound of this word, it gives them a feeling that rates of so and so daily use items are going for a steep hike. Don’t be surprised, it is a fact with many ordinary customers.
Though, it is easy to find the reason for such behavioural pattern on the part of some selected class of people. Across the world, it is quite customary whereby the government presents the annual Budget for a country, and as a part of budget announcements the prices of many essential commodities like petrol, diesel, cooking gas etc.
normally go for an increase. Nowadays it has become a ritual when immediately after the presentation of a country’s annual budget, the first job of opposition parties is to criticise the budget and then to reject it out rightly. Howsoever good a budget may be, the opposition parties will always term it as anti-people.
But a close review of the word – ‘Budget’ would prove that sometimes we are a bit unfair by attaching such a negative connotation with it. In reality, the word ‘budget’ is not only important to any government of a country, but even is equally important to each and every entity including a human being.
Therefore, before we delve further on this subject, it is important to understand the literal meaning of this wonderful word called – ‘Budget’.
One of its most accepted definitions states that “A budget is generally a list of all planned expenses and revenues; it is a plan for saving and spending”.
In other terms, a budget is an organisational plan stated in monetary terms. After going through this simple definition, don’t we now feel more attached with the word ‘Budget’, than was the case earlier? Is it not a fact that it touches our daily life, in one way or the other? We all know that both revenues as well as expenses are an integral part of our daily lifestyle.
Once we know the expected revenues, and corresponding impending expenses, the next step is to plan for a disciplined saving coupled with a sensible spending. This is nothing but a budget. So knowingly or unknowingly, we all deal with this exercise of preparing a budget in our own fashion.
The only hitch which I could foresee here is when most of us do not undertake the budget exercise in a formal manner. This is due to the fact that some of us are under a wrong notion that preparation of any budget is the job of a qualified accountant.
This may be partly true if we are talking about the budget preparation for a big organisation or any country’s budget, which may be slightly of a complex nature. But what I am referring here is your own monthly budget and I am sure its preparation is well within your reach without involving any rocket science per se.
In order to prepare your monthly budget, you simply need to know the details of your expected revenues/income and the corresponding spending that you intend to undertake during the month. So first, start by recording your monthly income. Gather your income details from all possible sources and figure out how much money you can expect to make each month.
Put this information on your budget sheet under the heading “Income.” Once you have recorded the income from all sources, the next logical step is to list the expected “Expenses” for a month. Figure out how much you regularly pay for things like rent/mortgage, utilities, fuel, phone, TV cable, internet access, etc.
You should also add in expenses on groceries by using recent shopping bills. Further depending on your lifestyle, add the money that you intend to spend on various recreations. While on expenses, don’t forget to record the monthly loan installments, in case you are servicing any loan taken for a