If you’re one of those who do not know how the money and income are spent in a month and do not have enough money at the end of the month, so you have problem in financial management. Read this article to the end to make both ends meet.
What problems do we have if we are weak in financial management?
Most people who are weak in financial management usually have a few problems. One of them is, they always say: “I do not understand how my money finish!” One of the other things is that they usually don’t have enough money at the end of the month. Another problem is that they usually spend more when they have more earning.
Therefore, if we are weak in financial management, we may even have problems in meeting the ordinary needs of our lives. So we cannot do well in saving money, being rich and success. As a result, we need to look for a solution to do financial management well in our lives. The solution is budgeting.
Reading: What is financial independence
What is budgeting?
Budgeting means predicting what you need to spend in your life and determining the amount we are going to spend on each item. In fact, we stop wasting our income by budgeting. But if we do not budget, what problems do we face?
- We cannot save money or save money a little.
- About 35 to 45 percent of our income spends without knowing how!
- The more you earn, the more you spend.
- We buy something that is not necessary so we are having trouble buying the necessary items.
- Most of the time, we are not satisfied with our incomes.
- We have to borrow money from the others.
- We cannot make both ends meet and we always don’t have money
Note that budgeting does not mean to be stingy with money. But it means spending correctly. Budgeting is exactly like saving (something we do not often do). They also say that saving means using correctly, not using a little.
When they say do not waste the water, it does not mean, for example, we shouldn’t go to the bathroom. It means that when we go to the bathroom, we do not open the shower from the first to the last. Or, for example, do not open the tap when brushing our teeth. We do the same with budgeting. We have the necessary expenses, but they are calculated and controlled. That way, we can save money. Now we explain the budgeting method for you.
How can we budget?
Budgeting is easy and it has two steps. Maybe it’s a little hard for us first, because we’re not used to it. But if you do not get tired and continue, you will learn this method very soon.
۱- Writing all our daily spending
In the first step, we should write all our daily spending. At this step, we must try to write all the expenses with details. Like the costs for transportation, fuel and food. Write all the details. Because everything should be clear. If there are the things that you do not spend on them each month, write them separately. Be careful not to miss anything.
۲- Categorizing the expenses and determining the expenses for each item
At this step, we must determine how much we want to spend on each item. This means cost prediction. We can categorize the costs. For example, specify a category for a food cost, and write down the items that we would like to spend on this category with details, and specify how much we want to spend on each item.
When we have done these two steps, we can combine all the written expenses together. If you do that right, you’ll find out how much you’ve been wasting your income before. Of course, for having a better controlling on your costs, it’s better to write all your expenses. So you can compare the costs with the costs you were expecting. You may have realized that you forget to write a series of costs in the first months. But you will be skilled in budgeting and managing finances.
Farshid Pakzat Research Group