(Person Finance) 7 Steps to Make A Personal Financial Budget

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Everyone certainly has their own goals, one of which is financial goals. Everyone certainly really hopes to have good finances and can meet all their needs. However, this turned out to be not easy, it requires careful planning and good control on expenses. Therefore, it is very important to create and prepare a personal financial budget.

Although it is considered quite important, there are also many people who neglect their personal financial budget for reasons that are difficult and do not have time. In fact, having a financial budget has many benefits, one of which is maintaining personal finances to achieve financial goals in the future. In this article, Kini.Id will discuss some important things you should know about financial budgets.

Come On, Know The Benefits and Steps to Make A Personal Financial Budget


Benefits of Making a Financial Budget

In terms of financial planning can be said to be successful if you have achieved life goals. But in order for financial planning to function properly, the current situation and the plan must be in sync.

Because, every individual has different income, expenses, obligations, dependents, life goals and income every year. Thus, it requires a unique plan that works in its specific setting. Quoting Business Today, here are five benefits that can be enjoyed with good financial management.

1. Understand Financial Position

With a financial budget, you are required to make a detailed list of all income and expenses, ranging from expenses for daily needs, education, health, entertainment, emergency funds, to zakat or alms.

So, you will know to what extent your expenses will have an impact on finances. When you want to increase additional costs, then you will refer to the budget, so that you can choose whether to do it or not.

2. Help Adjust Finances

When you prepare a monthly budget for a year and feel that your expenses are stable enough, you can start investing. However, if this situation doesn’t match your financial goals, you can rearrange your plans. That’s the benefit of you making a financial budget.

3. Learn the Limits of Savings Capacity

Having a budget will help you understand the long-term effects of any adjustments you make to your expenses. For example, when you need to cut spending to increase savings, or when you want to increase spending by taking savings.

4. Set Realistic Goals

By having a monthly budget, you can also check the scope of maximum savings and the point at which you cannot cut expenses. So, you can more easily set goals realistically. It can also help you when deciding what type of investment is right for you.

5. Manage Cash Flow Better

The monthly budget that you make in one year will also help you feel used to a different budget each month. For example, there could be multiple payments such as school fees, property taxes or others that make your expenses different. You can evaluate it and make some adjustments and postpone avoidable expenses for better financial cash flow.

Steps to Create a Personal Finance Budget

After understanding some of the benefits that you can get by creating a financial budget, below will explain some steps to create a personal finance budget that you can imitate.

1. Determine Your Financial Goals

The first step you must take when you want to create a financial budget is to determine your financial goals by understanding and measurable. For example, what is the targeted amount of money and the time period so that it can be evaluated.

For example, having an emergency fund of IDR 30 million at the end of December 2021. Next, the targeted amount of money is divided by the number of months from now to find out how much money is targeted per month. If today is September, then to reach Rp20 million within 4 months (Until December), then per month you have to save Rp5 million.

2. Collecting Financial Documents

After determining financial goals, the final step is to collect all the financial documents you have. Starting from passbooks, bank statements, bills, credit card bills, or other financial documents. With this document, you can make an average of your monthly expenses. The more information you gather and dig up, the better at budgeting too.

3. Know Your Overall Monthly Income

When you want to make a financial budget, you need to be aware of how much income you get each month, both from salary and other sources of income. If the income model you get each month is regular salary that has been deducted by taxes, then later you can enter net income.

But if you are self-employed or have a side job or income from a business, then add it to your overall monthly income as well. For those of you who have variable incomes such as seasonal work or freelancers, then you can use the lowest income in the last year as a basic income before you prepare a financial budget.

4. Calculate Overall Monthly Expenditure

After realizing your overall income, you also need to calculate how much money you spend each month. Try to calculate routine expenses (monthly necessities shopping, daily food allowance, transportation money, credit money, debt installments, and so on), as well as non-routine expenses (doctor fees and entertainment). To be able to make this list, you can view financial reports for the past 3 months such as your credit card statements, bill payment receipts, and so on.

5. Determine Fixed and Variable Expenditures

When you want to prepare a financial budget, you must be able to determine which are fixed expenses and variable expenses. Fixed expenses are expenses that must be paid and the amount paid is the same every month, such as school tuition fees, car installment bills, Internet fees, and others.

Meanwhile, variable expenses are expenses that change in amount from month to month such as entertainment, gas money, gifts, eating out and other expenses that appear in one month. You should start by determining how much the expenses are worth for each category, and estimate how much it will cost to pay for fixed and variable expenses.

6. Determine Overall Income Expense

This is a pretty good move if your income is higher than your expenses. This means that you have extra money that you can use to save. If your income is more than your expenses, then you can try practicing the 50-30-20 budgeting method which can help you manage your finances and create a personal budget.

But if after analyzing it turns out that your expenses are greater than your monthly income, then you really spend a lot and are wasteful so you need to make some changes to your finances.

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7. Making Budget Adjustments

The final step you should take is to make adjustments to your personal budget. If it turns out that expenses are greater than income, then you can manage it by cutting variable expenses.

You can outsmart it by cutting out variable costs that you don’t really need or don’t really need. Such as eating out, entertainment, and so on. So that you can more easily find a customized personal finance budget.

Those are some important things related to the financial budget. By having a good financial budget and adjusted to your financial goals, you can be sure you can have healthy finances. So, if something unexpected happens in the future, you can handle it well without going into debt.

However, if at this time you just want to make a financial budget but are already pressed for an urgent need, then you can take advantage of Kini.Id. With Kini.Id, you don’t have to go into debt just to meet your emergency needs. Because, with the Kini.Id application, you can get your salary up front without having to wait for payday off. So, you can meet your urgent needs right away.

Well, those are some reviews that are important for us to discuss about a personal financial budget. If you are planning to make a financial budget. First make sure to know the steps so that a systematic financial budget is made from me, thank you for your attention.

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