A household budget is a plan that describes how one spends the income one earns, and how the income will enhance the achievement of the financial goals of a given person. However, a large number of people fail to draft a household budget with the belief that, one knows the necessities that are required in the house. However, failing to plan for the income creates inconvenience. One does not have any idea of how much to spend such that; one tends to spend a lot of money on the household necessities. Also, overspending hinders one the achievement of the set financial goals in that; there is no savings neither any income directed towards the financial goals.
When I look at my budget, a lot of changes have been made. The amount of income that I earn is proportional to my household needs hence the probability of achieving my financial goals. Also, the budget has enhanced evaluation of the income allocation such that; the most important needs are given the first priority while the least important are given the least priority. After prioritizing the needs, the budget allows proper allocation of the income to each and every need, hence determination of the amount to be spent and the savings for my financial goals. Also, the budget enhances the understanding of the various needs that can be done away with and still maintain a good living standard that will be consistent with my income. However, the overall reason for the budget is to enhance a skillful s[ending of the income I earn, hence prevent overspending and hence be in a position to achieve my financial goals.
Budget analyses
Though the budget plays a major role in the income management, budget analysis is a major factor in enhancing responsibility of each and every coin of the income. Sometimes, one tends to think that the budget is balanced with the amount of income while else the budget is above the income that one earns. Also, the amount allocated for different needs tends to be above one’s living standards such that, the amount one saves is very little compared to the capital required for the financial goals. However, the budget analysis enhances the clarity of the money to be spent, hence create a more competent budget.
My budget for the first month shows a large amount of money projected towards my needs. Nevertheless, I did no see that as a major problem seeing that the actual amount would be less than the projected amount. However, when it came to the actual amount of money to spend, I realized that I was living beyond my potential. For example, I would spend a lot of money for outside dining, the gym and a lot of money on the house bills. Also, the amount of money I spent on buying household items was too high such that I ended up spending a lot of money. Nevertheless, the budget for the second month should be much favorable. When I compare the amount of income for the two months, the first month shows a large amount of money spent. Also, the amount saved is very little such that to satisfy the household needs; I have to inquire extra costs. However, the second month budget is way better compared to the first month budget. For example, when I look at the amount of money I spend on the household needs, the amount is low and favorable. Also, the amount that I spent in the first month has reduced by half such that I have a large amount of savings for the month. For example, the amount I spent on rent for the first month was very high compared to the amount spent in the second month. The reduction has been triggered by the fact that, the place I was living before was expensive. Also, the cost of living in the area was very high hence the decision to move to a more convenient place that I would spend less for more. Also, I have cut short the amount spent on the vehicle. I have reduced the amount spent on gas by reducing the number of trips I take with the vehicle hence cut down the repair cost and the gas cost. The second month budget has shown progress hence a large amount of savings to help achieve my financial goals.
Conclusion
Each and every person wants to see a change in life while one is earning. However, the changes cannot happen if one does not budget for the income earned. A household budget is one of the best ways to trigger changes in one’s standards of living, hence enhance achievement of one’s financial goals.
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