Budgeting 101: Your Personal Finance Outline

Dec 02 , 2022 3 min

 

Managing your finances can be a stressful topic to bring up, let alone handle. In fact, breaking it down into chunks makes money management a solution rather than a fear or burden. Budgeting is the main financial activity that gets you on track; it can and should be practiced by everyone who seeks financial stability and fostering better spending habits, and who prioritizes financial goals. 

 

By definition, personal finance refers to the management and planning of your own financial activities, including earning, spending, and saving money, making investments, and purchasing insurance. The process of managing your own finances can be outlined in a budget or financial plan. 

A budget is a detailed assessment of all of your revenue, including your salary as well as any potential side jobs or investment money. Laying everything out in front of you allows you to see where your money is going and make adjustments accordingly. If you're not currently on track to reach your goals, a budget helps you get back on track.

Looking for a dynamic tool that encourages you to budget and save up for your goals? Discover Crunch.

The famous 50/30/20 budgeting model constitutes allocating 50% of your income to necessities (such as rent or mortgage, food, and car payments), and 30% to other needed bills (such as phone and streaming subscriptions) or "nice to haves" like eating out. The remaining 20% should be set aside for savings and investments, including an emergency fund, retirement plans, a down payment for a home or a new car, or even reducing your debt. Applying the 50/30/20 rule to your current cash flow is one way to improve your financial situation.

You should take some time to think about ways to reduce your spending or boost your income if your personal insights differ significantly from the 50/30/20 model. That will set you up for success and enable you to achieve both short-term and long-term objectives.

The Importance of a Personal Finance Budget 

Developing a budget and monitoring it in real time is the one step that makes achieving all other financial goals possible. Say goodbye to needing piles of paperwork and spreadsheets or to waiting until the end of the month when your bank statements arrive to analyze your financial situation. 

Say hello to Crunch App which will empower you to budget like a pro and track your progress in real-time. The built-in machine learning algorithms will analyze your spending habits and suggest a monthly budget for you to simply monitor along the way. 

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