Reasons to Budget

Source: Motivence

Overall Significance:
At work, we have what we call a “PTI” walk, which details our “Path to Income”. Essentially, it is your P&L report, detailing your revenues, expenses, taxes, depreciation, and of course your net earnings. This “walk” is critical to our budget as we are able take assumptions, run reports, and draw conclusions.

As consequence, we are then able to construct long range plans, and use it as a guideline on how to allocate resources (which is the most essential reason to create a budget). That is why, it could be translated to your personal life. And we always preach that in order to be the best economic version of yourself, you need to organize your economic goals.

Your Budget Spreadsheet Explained:
We have created an excel spreadsheet (budget) that is simple to use. It allows the user to input their income and expense assumptions to later find out the "remaining cash position". The process is simple and the approach is fourfold:

1. Input the after tax estimate of your annual income in the assumptions page. We have allowed the user to input up to four household incomes. The model would allocate the necessary values for each month, depending on the weeks of a month.
2. Input expenses on a monthly basis in the assumptions page. If you have a yearly expense, break it down to monthly installments. For instance, if you spend $2400 a year on vacationing, you would input a $200 monthly expense.
3. On the “Full Year” column, it would detail the total annual amount in terms of dollars. On the “Full Year %” column, it would detail the percentage of either the expense or leftover cash relative to the total annual income received.
4. You may click on the “Quick Analysis” button to help you get subjective advice on your allocation. The breakdown of the analysis is based off a simple algorithm.

Ultimate Benefits Of Creating A Budget:

1. Ensures a system of governance of your money and cash
2. Provides goals and concentration of your allocation
3. Increases awareness of your hard earned money
4. Better decision making of your investments
5. Help you with saving efforts and debt obligations
6. May give you the determination to work harder to produce additional cash flows
7. Gives your hard earned money a story and allows you to better your economic situation

If you desire to have more then manage your budget well. It will also be the source of motivation to aim higher.