Personal budgeting
Overspending occurs when one uses savings and build up debts. Planning personal budget helps to solve such cases and controlling use of funds. It requires personal discipline as the amount saved and what they are intended to purchase to be fulfilled. Budgeting helps to answer the question of whether one can afford what is spending or intending to do. It helps in decision making in regard of time in comparison with income, saving and cost of the product. One gets to understand spending and prioritizing making stick to the goal or the objective of saving.
There is a technique that is used while budgeting for the project of choice. It involves selecting the categories of spending and is guided by the project and its cost. Having a financial goal for buying a car that costs for 4000 dollars for two years, one is supposed to budget income monthly and saving 117 dollars per month. This can take exactly to a period of two years to finalize the project. This is the amount that can be achieved by a part time employee especially college students.
The improvement in financial position has come from the realization of the entire project. This comes up with the benefit of having a car of choice within the time frame planned. The process of planning budget contributes to the accomplishment of long term goal. It helps one to have learned to use funds or income appropriately by setting the budgeted amount as savings with an intention. Therefore, it keeps the saver in a position of realizing both short term and long term goals effectively.
References
Gelb, E. P. (1999). Personal budget planner : a guide for financial success. Woodmere, N.Y: Career Advancement Center.
Meese, M. J., Keiser, B., & Berner, J. K. ( 2009). Your savings : how to assess your savings, plan ahead and budget. London: Kogan Page.
