Do It Yourself: Budgeting

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American financial advisor Robert Kiyosaki, who has written over thirty-five books on managing personal finance and has got about 7 million people hooked to his radio show, agrees that budgeting could be one of the best personal financial planning strategies.

Planning is vital for every sphere of life, including money. You might be earning peanuts as compared to Dave, but that surely shouldn't stop you from planning your expenses.

Budgeting is an effective way of keeping track of your finances. It is crucial to segregate and prioritize your income into different sections. Once you're done with segregating your income into separate expenditure-heads, you can follow the type of expense-breakdown which works best for you.

The 50-20-30 plan is one of the most famous rules on financial budgeting, where you allow 50% of your income to the necessities, 20% to long-term savings and 30% is allocated to lifestyle expenditures. Proper budgeting would allow you to practice an efficiency-driven instead of an impulse-driven pattern of spending.

Follow these steps to organize your expenses and make the most out of your salary.

Follow Your Money for a Week

To get a better idea of budgeting, it is essential to track your expenses for seven days. Make a list of all your expenses for a week and analyze it properly. Spot the expenditures that could be avoided in the next month.

Segregate Your Income

Generally, a person's entire income is spread across three main heads - necessities, expenditure on improving lifestyle and loan repayments and savings. You can use the same rule to separate your monthly spending. There are a few interesting money management tools that can help you track and segregate your finances.

Prioritize the Expenditure-heads

It's important to understand the degree of priority that all these sections demand. Necessities must take the top spot in your priority list, followed by loan repayments and savings and it should end with the expenditures to be made for improvements in lifestyle. Merging this priority list with the famous 50-20-30 rule would help you in generating a useful and practical budget.

Do It Yourself: Budgeting

There's No Perfect Budget-sheet

Even after extensive money planning and creating a budget-sheet for their finances, some people fail to see the results and lose faith in the entire idea of financial planning. You must avoid making that mistake. A budget, like most of the personal financing techniques, requires a lot of patience and willpower.

Designing a budget is the first step towards better financial stability. However, if the budget that you have created doesn't improve your spending habits or generate savings at the end of the month, then you need to find ways to improvise it.

How Can I Improvise on My Budget-plan?

Even though a large number of financial gurus swear by the 50-20-30 rule of budget-planning, you might not get the anticipated results by following it. Some of the common reasons for a budget-backfire are listed below:

A Higher-than-average Amount of Debt

When you have a huge unpaid debt, then the interest on the debt compounds annually, making it difficult for you to bounce back from the debt-trap. A generic budget-planning would not help you much, in that case, you need to allocate your income differently so that a more significant chunk of it is diverted towards the repayment of loans.

Resorting to Costlier Alternatives

It is also possible that you have been resorting to a costlier alternative of the same product. Planning your money would require you to optimize in many ways, and switching to other options that are sustainable and less costly is one of them. For example, fuel is considered as a necessary expenditure, but you can always avoid the fuel-expenses by hiking the public transport once in a while.


One of the major reasons for mismanagement of finance is splurging or impulsive-buying. Even if they follow your budget-plan in a disciplined way, for an impulsive buyer, a one-time shopping round could ruin the entire budget-planning.

To Sum Up

Budgeting is the key to financial stability. If you wish to save up for traveling the world, pay for the diamonds that you want to buy or to organize your expenditure intelligently, there's a need to have a sound and practical budget. You can follow the 50-20-30 rule or formulate your own budget rule based on your spending pattern.

If you have credit cards or loans, also make sure that you check your credit score regularly.

It's imperative to have the will to guide yourself through the entire process of budgeting your expenses to get the desired outcome from it. So, design a practical and efficient budget to enjoy its perks at the end of the month!


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