The Benefits Of Budgeting

Budgeting for both your individual debt repayments as well as your other financial obligations like bad credit personal loans is a prudent step that can not only allow you to better allocate your own resources but also to more effectively build your own wealth. This article will provide you with some assistance in considerations that should be made when looking to build and manage a personal budget


The first step that should be used when you are first developing a budget is laying on the table all of your various inputs and outputs so that you can better understand your financial situation. Your income is typically easier and a great place to start. Organize (a financial spreadsheet if often the best option for doing so) all of your sources of income including your regular sources of income such as your paycheck any interest and dividends that you earn on investments, and any other alternative sources of income. Then summarize your atypical sources of revenue including any tax refunds that you are likely to get, bonuses from your job, and gifts and keep these separate from your regular income sources. Some people like to assign a probability to the various non-typical income sources when developing a budget.

Next move on to the expense side of the equation and create a list of the expenses that you currently are facing. Some are easier to identify such as your rent or mortgage payment and others are more range bound and harder to limit to a specific number. An example of a range bound expense is your grocery bill which can fluctuate based on the items that you consume and can go up or down each month. Find an average expense for these individual expenses and try to estimate what these expenses are. It is easy to miss certain expense so try to make a complete list by reviewing your bank accounts and summarizing the amounts that you take out of your account in cash and compare this to your expense list. Add in your credit card purchases to see what the expenses you charge are and try to make a comprehensive list of your expenses in this way.


A budget is not just about the expenses that you have incurred in the past but also those that you are likely to incur in the future. As such it should consider your future expenses in addition to those that you have incurred to date or in the past. While you are assessing your past expenses for your budget project what these costs are going to be in the future using some realistic assessment of their projected increases. If your rent has increased at a certain rate each year then you should build that into your future expenses. Do the same with other major expenses that you have. Try to leave a buffer in your calculations but don’t be overly conservative while doing so. This will help you to develop a budget that you feel comfortable with but one that is not drastically distant from reality.

A budget can be a lot of work to set up and requires regular work to maintain over time both in terms of documenting but also in terms of assessing your costs. After each prescheduled period that you define (monthly, quarterly, or annually), perform a reassessment of your budgeted revenue and expenses and compare it with your actual figures so that you can determine how reasonable your budget was. It is important to understand the good and bad things that are associated with your budget and to work on improving the accuracy of your budget going forward by checking on and understanding the differences between your actual and budgeted costs.

A budget is useful in that it can help you to fully understand the costs that you have set aside for various expenses and how you can potentially lower them y looking into cheaper alternatives. Finding alternative ways to reduce your expenses is an essential part of budgeting but so is the process of finding ways to set aside sufficient funds to meet your financial obligations including repaying your debt balances. Overall a budget is a useful tool that can aide you in repaying your debt but also in improving your overall financial position.