Budgeting and forecasting
What is budgeting and what is forecasting? According to my favorite online dictionary budgeting is an itemized allotment of funds, time, etc., for a given period. Forecasting, on the other hand, for our purposes, means to plan or arrange beforehand. If you combine the two you come up with a budget forecast. We usually hear these words in financial news in relation to government expenditures or of business corporation’s financial operations. We seldom encounter these two words together in our homes. Budgeting and savings yes. But forecasting? Only when we talk about weathers and sports.
Things to do to keep budget forecast on the right track
- The relationship between income and expenses should be in the favor of the previous. If it’s not possible at least they should match. But never shall the later exceed. You’ll be treading dangerous waters if you do that. Times have changed. The pre-crisis prosperity is long gone; it only exists as an afterthought in the minds of those who enjoyed it. And excessive use of credit cards has helped hasten the economic collapse. You should be more careful in using your credit card. There’s no way you can balance your budget if you don’t stop using it indiscriminately.
- If you feel uneasy about your expenditures you know there is something wrong with it and you’re going to be in hot water. Make corrections right away. The governments of the world called it austerity measures. It’s going to hurt but it’ll keep your budget going in the black. It’s bad enough to over spend but to exceedingly overspend is even worse.
- How’s your budget going? Are you still towing the line or are you veering more on the deficit side? If you’re, let’s say, curving 5% on the negative direction, how do you intend to get back on track? Without a list you won’t even know where you’re heading for. Make a list; do the math. If despite your best efforts you still lag behind, try to apply for government entitlements like food stamps, child care assistance, or housing assistance.
- Do your budgeting depending on how you’re being paid at work. If you’re paid weekly make your budget forecast weekly. If you’re receiving your salary every fifteen days, come up with 15-day budget program. And you can also do it monthly if you’re a monthly income wage earner. You’ll have a clearer view of where to spend your money. Let’s say you’re receiving $500 a week then you know you have to spend $500 or less.
There are several other ways of keeping the budget forecast on track. Learn more about them to give you more choices on how to go about with balancing your budget.
Families need to plan just like all other establishments
Families just like governments, business establishments, and financial institutions, just to mention a few, need to have sound financial budgeting and forecasting. It’s difficult to establish a proper direction without them. You start with budgeting. Then you continue with your forecasting. And then after you establish the two you can eventually chart your direction. There’s nothing so much as big a difference between families and other institutions except perhaps the amount of money involved for budgeting.