Earning money may seem difficult however, how you manage that earned money according to a set budget makes all the difference! It is crucial so that you can easily fulfill all the short-term and long-term goals without any hassle.
So, do you have a planned budget to cater all your needs? If no, don’t worry! Today, we shall uncover all the basic elements of a budget so that you can formulate your monthly budget as per these elements in a jiffy.
Note: You can also seek advice from any money management service provider who offers reliable budgeting service for any additional help!
So, let’s get started!
4 Basic Elements of a Budget
Whether you live in any part of Canada, be it, Calgary, Edmonton, Lloydminster, and Alberta, these elements are quite essential to keep in mind to keep a track of your expenses!
1. Monthly income
The monthly income should be net payment you earn for that month. It is your monthly salary that you earn from your employer and if self-employed, it is the income you earn after deducting all the business-oriented costs.
These include the money you are spending on different aspects of your life. They are further classified into three types:
- Fixed: These expenses are the same every month and you need to pay them no matter what. Some of its common examples include: phone bill, rent, mortgage or insurance. They cannot be modified thus, they are your first priority to be separated after you receive your income for that month.
- Variable: These expenses are alterable and largely depend on the monthly use. Since they are not fixed, you must over-estimate them and always over-plan about them beforehand. Always include an estimated amount for each variable expense in the budget to stay ahead. Some of its common examples include: groceries, transportation, electricity bills etc.
- Discretionary: All your desires can be fulfilled using the money for discretionary expenses. As the name suggests, these expenses focus on spending on all that you desire and not your needs. Budgeting proves out to be the best to manage your money well, so that you don’t have to only emphasize on savings or tracking your needs rather you can easily fulfill your monthly fun goals as well. Some of its common examples include: getting spa treatments, visiting a fancy restaurant, planning gifts etc. The best part is that these expenses can be lowered in case there is more outflow of cash than in-flow.
3. Emergency Funds
Rainy days are always bound to come, it depends on your preparation to stay financially strong on those days that helps you get through them. Some of its common examples include: some healthcare emergency, damage repairs or travel. It is better to start small for such unplanned needs from the start.
Last and the most important part that will keep you one step ahead of your financial goals is savings. They are the ones to save the day if you get some debt to manage. They also keep your future secured and you stress-free since everything is under control. You must start with short-term savings however, add long-term savings in the budget too for a good financial future.
The bottom line
With this, we end our discussion on all the elements of your budget. It is time to kickstart your budget planning right now! In case, you need any additional financial advice or help, just contact Credit720 that are the renowned money management service providers.