Financial planning is important to be successful financially. If an individual does not practice financial planning, he tends to spend more than income and it will cause the individual debtor. To avoid debt and borrowing, we need to plan how to pay. The best way to use the pay is good financial plan. Financial plan is called a budget.
Budget is our personal planning of how we will spend our income. It is a record of regular income, which we obtain the end of each month and record things that will be paid or to be purchased each month. The balance between both these records is money to be saved to achieve wealth.
Practice budgeting key to our personal money management for the following:
1. Budget forces us to think short-term financial objectives and long term. Without objective we will not succeed.
2. It tells us how the money should be spent. This helps us not to spend without thinking.
3. It helps us to save.
Being rich does not mean that a person has a decent, but we can get rich with smart use of money we have. Instead of high-paid individuals who may be poor, and lured in loans for not making financial planning.
A budget is a financial document used to project future income and expenses. The budgeting process may be carried out by individuals or by companies to estimate whether the person/company can continue to operate with its projected income and expenses.
A budget may be prepared simply using paper and pencil, or on computer using a spreadsheet program like Excel, or with a financial application like Quicken or QuickBooks.
The process for preparing a monthly budget for your business includes:
- Listing of all sources of monthly income, including sales and interest
- Listing of all required, fixed expenses, like rent/mortgage, utilities, phone
- Listing of other possible and variable expenses.
Reference : BizTaxLaw