Planning is an essential aspect of one’s life. We set goals and make plans to achieve what we want to on a regular basis.
|Having a financial plan (budgeting) and financial discipline is equally important to stop oneself from committing a financial self-sabotage.|
- Why engage in budgeting?
Budgeting helps one to prioritize one’s expenditure based on one’s financial constraints. It simply acts as a shield. Indians especially, stand as a proof to this; when the rest of the world was suffering from the effects of the 2008 financial crisis, Indians were at a far better position simply because of their habit of saving before spending.
Budgeting seeps in a sense of financial discipline into our minds ultimately making us responsible for the outcome of our budget.
- Are budgeting and debt trap two sides of the same coin?
Debt trap is nothing but an end product of financial mismanagement It becomes deadly when one is unable to pay back the amount due and enters into a long tiresome journey of borrowing to repay, in technical terms, debt trap.
By practising budgeting, one notes down the amount for expenditure (both fixed and variable) intentionally and consciously thereby helping one to keep a track on one’s expenditure while also addressing the burden of hasty or wasteful expenditure. Incurring expenditure therefore becomes more responsible as we become accountable for our actions.
- The magic of budgeting:
In the long run, such a practice makes one aware of the inflow and outflow of money, no more does one need to break one’s head wondering where all the money went! In fact, it enables one to control the money rather than money controlling one (which happens during financial mismanagement). It also ensures stability during times of emergencies and enables one to adopt smart ways to increase wealth.
Budgeting can be done on daily basis, weekly basis, monthly basis or yearly basis-as one wants. There is no steadfast rule to follow here, it’s individualistic and needs to be reviewed and amended from time to time in order to meet up with the changing circumstances.
Simply- Plan. Execute. Appraise. Repeat.