Budget is an effective tool to control financial expenditure and is used to manage the flow of money. It enables the tracking of expenditure and helps to identify irrelevant and unnecessary expenditure. Budgeting is a useful process based on which the expenditures can be limited and money can be saved. Proper planning of the money inflow and outflow leads to savings. We can set goals and use budgeting to achieve them. Budgeting is also used to track down the areas of unnecessary expenditure which can be saved with proper and prudent planning. Our limited income should be allocated to cover essential needs and the decisions regarding such allocation should be made sensibly.
We can start with preparing a budget sheet for every paycheck. The fixed expenditure should be estimated and accounted for in the budget sheet. You can set goals such as, purchase of a particular item or holding some special event and accordingly allocate a percentage of paycheck to it every month. This will help to save money to achieve that particular goal. Some portion can also be allocated for emergencies which cannot be foreseen. Budget is a very crucial tool and if used wisely can help our paychecks to last longer.