HOW TO SET PERSONAL BUDGETING

 

I have finished read a book about budgeting, and I got some insights from it.
In this time i'm gonna share about the importance things that I got to manage our financial especially personal financial an intended to build wealth in the future as long as we holding tight in our principles.
I'm gonna talk about budget plan monthly, there are four types of it, but for note, this budget plan truly could be apply for who have the same amount of net income every month or you guys who have stable income every month such as employe, but don't worry for you freelancer, entrepreneur or everyone who have not stable income or fluctuative amount it still could be applied, with note you have make a little effort to calculating your benchmark to set up this budget.

First time you have to summarize your income in several months and after you get the amount of it, it could be the Benchmark for you to set your budget plan or on the other way you could make your lowest income to be the Benchmark for your budget plan, what the intention of use "the lowest income"? the intenion is to preventing deficit in your budget monthly. but if you use the lowest income to be the Benchmark, if suddenly your income bigger than the benchmark,for me wisely you can allocateing it to saving pos or emergency fund.

Basic Budget Equation

1) 50-30-20 BudgetT
The first type of budget plan, I guess many people probably applying this budget in their personal finance, therefore it is easiest to use.
The rules in this type is your 50% of income spend for your necessarry and needs. For example if you a single, the stuffs in this pos is like eat, groceries, transport, internet, pay a house rent, or for you guys was still live on your parents' house, you have to give some money to them. actually in this pos the stuffs that definitely every month you buy or you spend for, if there are differences of amount you can reconciliate it appropriate with your circumstances.
30% of your budget is spended to your self reward, wants or the stuffs that you don't buy it every month. it depending to your necessities or the other way is impulsing buying that you can handle it.
20% of your budget is allocating to your saving account (it would be 10% to your emergency fund and half of it allocating to your future plan pos)

2) 80-20 Budget
There are not many differences from type one, basically it is same. The differences is actually in the priority, if in type one your priority in your needs, but in this type your priority is your saving.
Before you set the budget the first thing you have to send amount of money to your saving pos (in this type is 20%) if you had secure your money, after that you calculate the 80% from your budget to your needs, wants and other stuffs. In here doesn't mention the detail of the allocation but depends on your priority apporiate with your circumstances. the thing that concerns in this type is we have to prioritize to saving first

3) Zero Sum Budgeting
Before you get income, you already have plan for you financial. commonly it used for company
it prevail as budgeting method which all of expenses for new period is calculated based on actual expenses that will be spent. not in the diferensial basis with this method, every activity is needed to justification, explaining the revenue that will be proceeded every month for company. all expenses have to be corrected so that complete the term to be replaces in the budgeting

4) Debt Diet Budget
In the fourth type, there are so many detail each of the alocation, for me this type is suite for you who have a family, because the expense is more complicated
The rules are:
- 35% for housing (include everything to do with your house, rent, mortgage to utilities, insurance, repairs)
- 15% for transportation if you have (including car paymnets, gas, parking, oil changes)
- 25% for other living expenses (including Food, clothing, vacations, electronic)
- 10% for saving
- 15% for debt payment (including student loan, credit card debt, personal loan).

yaa that are the four types of budgeting, I hopes it could be your preference to set your personal budgeting and build wealth in the future
Stay Happy and Healthy