A budget is a plan used to forecast the amount of money that would be spent and on what it will be spent during a particular period— quarterly, monthly or yearly. It shows both income (revenues) and expenses of individuals, corporate bodies and even nations.
Different people have different budgets, although there are general templates for different stages in life. A student’s budget differs from a professor or an entrepreneur. Most budgets contain basic expenses such as food, transportation, health, rent at the very basic.
It gives you clarity as to where your money goes. It creates awareness on your spending habits, which gives you better choices on what to spend on. Are you spending more than you necessary on entertainment? You adjust accordingly.
A budget simply gives every dollar a job.
Come to think of it, when you plan ahead you are prepared to spend a certain amount on certain areas of your life. It literally tells you what has the most value most-monetarily.
When you give every dollar a job, all dollars are being productive.
There are a lot of templates and suggested percentages for each category. Check this guideline of suggested percentages for these categories. You can always eliminate and adjust to suit you.
· Housing(Rent/Mortgage/Repairs/Hotels) 25%
· Transport(Petrol/Repairs/Travelling fares/Parking tickets) 10%
· Bills and Utilities(Cable/Water/Electricity/Insurance) 10–20%
· Groceries(All raw foods/Vegetables/Fruits) 10%
· Restaurants(All eat outs and food deliveries) 3%
· Personal care(Health checkups/Drugs and medical treatments/Manicure and Pedicure/Hair care) 5–10%
· Clothing 3- 5%
· Charity(Tithe/Gifts/Donations) 10%
· Entertainment(Parties/Music and arts festivals/Recreation) 5%
· Saving & Investments(Stocks/Bonds/Mutual funds/Payment of Debt) 10%
· Miscellaneous 5–10%
What makes the budget personal is because it’s yours, so go ahead make yours.