Learning about Personal Budgeting Tools

Personal budgeting is one of the most essential aspects of personal finance. If you can master the act of effective budgeting, you can stay substantially in control of your finance. In essence, effective budgeting helps you to know how you spend your income, and what you spend it on. A personal budgeting skill is an essential part of financial literacy for individuals.

What is Personal Budget?

When you embark on a finance plan that assigns your income to expenses, debt repayment, savings, investment and other categories, you are carrying out a personal budgeting. A personal budget incorporates both personal spending and past spending. Personal budgeting is accomplished with wide range of tools and techniques. In essence, you can find tools and strategies for either creating a fresh personal budget or adjusting an existing one.

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Sample Budget

Typically, your budget will allocate your expected earning to categories such as expected expenses, intended investment, intended savings and more. Here?s a sample of typical personal budget illustrated below;

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Category Percentage (%) Monthly Amount Annual Amount

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Gross Income

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Taxes

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Net Income

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Food

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Housing

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Insurance

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Auto

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Debt repayment

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Savings

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Medical

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Investments

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There are more elements to be included into the budget categories such as school/children care, clothing, entertainment and recreation, and miscellaneous. You may also choose to modify your budget accordingly.

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Personal Budgeting Tools

In creating a viable budget, there are wide range of tools you can find helpful. It doesn?t matter the tool you employ, you must bear in mind that the accuracy of any personal budget is only equally good as the updated budget data?s accuracy; hence, if an old budget does not show the exact income or expenses, it would be almost valueless to the current budget. Recently, people have massively embraced the computer-generated budgets. Consequently, the need to write the budget all over again and start the calculation afresh (just to reflect new changes) has been eliminated.

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Here are essential tools for budget;

• Paper and Pencil; to create a simple budget, you will need a piece of paper and pencil. Also, you can bring a calculator in case you have a need for it. A simpler option is to use the pre-formatted bookkeeping or household budgeting forms. This option enables you to create a budget by simply supplying the right details in the blanks.

• Spreadsheet tools; these will help you create a budget based on need. Subsequently, the calculations are performed with ease using the rudimentary formulas in-built to the spreadsheet software. Typical example of spreadsheet tools include MS Excel, OpenOffice.org Calc, iWork Numbers and more. If you want to monitor your income and expenses, the budget spreadsheet will be ideal for the task. However, a lot of people do not employ budget spreadsheets any longer, due to the absence of date-shifting feature that eliminates the need to re-enter or move information at each month?s end. But, spreadsheet still remains a viable budgeting tool when complex budgets and planning are involved.

Other personal budgeting tools are money management software, spending management software and money management websites. You will learn about these tools in subsequent posts. ?

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Nik Halik is an Inspirational Keynote Speaker, Life Strategist, Successful Entrepreneur, Astronaut and Best Selling Author.

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