An integral part of everyday life is decision making and one of the most fundamental decision every rational individual is faced with is the decision of how to earn and use money. Knowledge of the wherewithal for using money is crucial because of the economic fact that states that human needs are unlimited but the means by which these needs can be satisfied are limited. Money is of course a means by which needs are met, so, it is pertinent to understand the dynamics of making use of money.
One of the keys to making good use of money and maximizing satisfaction from resources is budgeting. A budget is a plan that encompasses all phases of spending for a definite period of time in the future. Budgeting is hence the creation of plans for a given future by translating available or expected income into immediate or futuristic expenses. In other words, it is the art of allocating a specific amount of money to be spent on a particular need a forehand based on an estimated income for a specific period of time. In simple terms therefore, budgeting is planned spending.
There are three underlying factors for successful budgeting. First of these is that there must be an established source of income; at hand or expected. Second is that there must be well established immediate or futuristic needs and third, there must be an established time frame for which the income would be available and within which these needs must be met.
Budgeting is important for numerous reasons of which are as follows:
- Budgeting helps in prioritization of needs. This is so based on the fact that because needs are unlimited but have limited resources to meet them, needs are ranked in order of importance before money is spent on them. It therefore makes great a scale of preference.
- Budgeting leads to resource maximization. This is so because money gets to be used for prioritised needs. Money is spent wisely, aptly and satisfactorily.
- Budgeting leads to utility maximization. Money spent based on a budget lead to satisfaction because whatever need met on a budget is well thought out and ranked as important.
- Budgeting enhances planned spending. With a budget, expenses are made based on a well stipulated estimate. Impulse buying is cut off completely or minimised greatly via budgeting
- Budgeting is a valuable tool for promoting savings. Of course, when money is spent based on a plan, waste is minimised and there is room to save as needs gets met, not forgetting that savings is itself a secondary need.
- Budgeting enhances financial discipline as it gives control over expenditure.
- Budgeting helps coordinate spending as it gives an estimate of whom or which need gets what; how, where and when.
- Budgeting serves as a guide in financial goal setting.
- Budgeting makes people prudent and as such, makes people live within their means.
- Budgeting promotes financial responsibility. This so because it provides the information via which people can review their financial decisions and actions as well as make amends where necessary.
- Budgeting enhances financial dignity. This means via budgeting people are prepared to receive and spend money.
- Budgeting leads to financial accountability because it helps people measure their purse and serves as a check whereby people can know the direction of their spending and ascertain its area of concentration in spending.
- Budgeting helps in financial forecast because via budgeting, people can predict the direction of their income and expenditure within a particular time frame which may be relevant as a guide for financial operations.
- Budgeting on the whole leads to personal or general growth and development.
To make budgeting easier and doable, apps called budgeting apps have been developed specifically for budgeting purposes. A budgeting app is a software application accessible via a computer, tablet, or mobile device in order to keep track of personal finances. Budgeting aps may be free or paid for. Howbeit, whether there are several apps ten of which are highlighted below.
Good budget: This app enables its user to plan personal finances without necessarily tracking transactions. Its user can categorise monthly income into expenditure called envelops.
Fudget: This is a simple app for listing incoming and outgoing money. It helps its user track personal balances after inflows and outflows.
Honey due: This app is designed for budgeting with a partner. Partners can via this app take joint loans, make joint investments, carry out joint spending and most importantly set monthly limits.
Zeta: This budgeting app is designed for couples who may or may not have decided on joint finances. It enables them to sync their various accounts, track spending, know their net worth as well as take charge of managing their bills.
Personal Capital: This app is unique for the fact that it can enable its user make retirement plans and tracking net worth. The app shows total monthly income and expenditure, creates specific goals, add budgets, and compares budgets of previous months with the current month.
Pocket Guard: This app tacks its user income, expenses and saving goals in order to enable the user to determine how much can be spent every day. Hence, via this app, the user can curb overspending and take charge of financial goals.
You Need A Budget (YNAB): This app enables a user track spending and be proactive in budgeting.
Expensify: This app is useful for a business or corporate traveller who desires to give account on expenses made in the course of the trip. Via this app, financial retirements for expenses made on such trip may be via pictures of the time each expense is carried out, the distances travelled as well as print outs for proofs in reports.
Simplify by Quicken: This app is good for tracking monthly bills and subscriptions. It also reveals to its user, progress made on financial goals. It is cash flow relevant app.
Mint: This app is proficient for paying bills and sets reminders for same, tracking daily spending and establishing total spending at a glance.
In summary, budgeting is applicable to individuals, groups, organisations, and governments. More so, initiative, discipline and vision are required by anybody, or people interested in budgeting.
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