Understanding the Principles of Budgeting

UNDERSTANDING THE PRINCIPLES OF BUDGETING WHAT IS BUDGETING? Budgeting is the process of allocating money for different purposes or uses. It is coordinating income and expenses, where by specific amounts are allocated for specific uses, usually called items of expenditures. it is the process of cre...

UNDERSTANDING THE PRINCIPLES OF BUDGETING WHAT IS BUDGETING? Budgeting is the process of allocating money for different purposes or uses. It is coordinating income and expenses, where by specific amounts are allocated for specific uses, usually called items of expenditures. it is the process of creating a spending plan called a budget. A budget is a written outline of the list of expenditures to be incurred in the future.  WHY IS BUDGETING IMPORTANT? Every individual, family, and business should learn to budget their monetary resources for the following resources. 1. It ensures that the money available is sufficient or enough to meet the planned expenses. 2. It ensures that set goals for an individual, family, or business are attained. 3. It instills fiscal or financial discipline. 4. It serves as a training for everyone, especially the youth. 5. It relieves tensions and worries when money is ensured to meet the needs in the future.  THE PRINCIPLES OF BUDGETING 1. The Budget is planned to meet needs and wants. ARRANGE THE NEEDS AND WANTS BASED ON THE ORDER OF IMPORTANCE. IT IS A MATTER OF WHICH NEEDS MUST BE PRIORITIZED AND WHICH NEEDS SHOULD BE ADDRESSED.  THE PRINCIPLES OF BUDGETING 2. The Budget realizes short- term goals in relation to long- term goals. A short-term goals are things or projects we want to achieve in a short period of time. A long-term goal consists of several-short term goals.  THE PRINCIPLES OF BUDGETING 3. The budget should be planned according to the money available. It is the availability of money that will dictate the expenditures to be included and how much is to be allotted for each item.  THE PRINCIPLES OF BUDGETING 4. Needs take priority over desires, especially in the case of a limited budget. Budget is limited. Needs must be reduced only to those which are essential to day- to-day living.  THE PRINCIPLES OF BUDGETING 5. The size of the budget depends on the money available, the number of needs and desires, and the number of an individuals in the family whose needs and desires have to be met.  THE PRINCIPLES OF BUDGETING 6. Provisions for alternative methods and goals can be set up to meet emergencies that may arise like a budgetary deficit.  1. HAVE A CLEAR APPRECIATION OF POSTING TIPS TO EFFECTIVE 2. LEARN TO PRIORITIZE BUDGETING 3. LEARN TO SACRIFICE 4. LEARN TO DELAY GRATIFICATION  1. HAVE A CLEAR APPRECIATION OF SPENDING IF SPENDING DOES NOT HAVE A CLEAR PURPOSE, THEN IT IS NOT WISE SPENDING. IT IS WISE TO REMEMBER THAT HARD- EARNED MONEY DESERVES CAREFUL PLANNING AND DECISIONS MAKING 2. LEARN TO PRIORITIZE IN ORDER OF IMPORTANCE, ONE’S NEEDS IN RELATION TO INDIVIDUAL OR FAMILY GOALS. ATTEND FIRST TO THE ESSENTIAL NEEDS FOLLOWED BY THE LESS IMPORTANT ONES THAT MAY INCLUDE YOUR WANTS AND DESIRES.  3. LEARN TO SACRIFICE LEARN TO PRACTICE THE PRINCIPLE OF RESTRAINING ON SPENDING UNNCECESSARY. 4. LEARN TO DELAY GRATIFICATION THERE ARE TIMES THAT ONE NEEDS TO POSTPONE SPENDING ON ACTIVITIES OR THINGS THAT ARE FUN AND ENJOYABLE TO GIVE WAY TO SOMETHING ON UNNESSECARY WANTS.