Personal budgeting involves tracking income and expenses to understand how to allocate money and achieve financial goals. It is important to prepare a budget to identify goals, manage money better, increase savings, and prepare for emergencies. A personal budget should determine income sources, average income over 6 months, categorize expenses as fixed, variable or discretionary, average expenses over 2-3 months, compare income to expenses, set financial goals, and regularly review progress. Proper budgeting leads to financial security.

1. Personal Budget-
The key to a more secured financial future

2. What is Personal Budgeting?
 A budget is an assessment of income and expenses for attaining financial goals
 Personal budgeting is about understanding the equation between an individual’s
income and expenses to regulate the usage of money.
 Understanding personal budget results in a healthy financial life of an individual.

3. Key Elements
 This presentation will help you understand-
Importance of Budgeting
Steps to be followed
Ideas

4. Why prepare a budget?
Why is budgeting important What happens when you don’t have a budget
• Helps you identify and achieve financial goals
• Helps you manage your money
• Increases your saving
• Directs your money flow.
• Prepares you for contingencies
• Provides sense of financial security
• Without a budget, your are unaware of your
financial situation.
• By surviving month to month, you are not
prepared for any emergency.
• No budget = No savings.
• No investment ideas if you do not know your
budget
• Absence of a budget can keep you in debts.

5. Preparing your Personal Budget (Step 1-3)
• Determine how to track the
budgetary information.
Step 1
• Determine your income
from different sources
• Average out income over
a longer period- minimum
of 6 months
Step 2 • Determine your expenses
by dividing into 3
categories
Step 3
Discretionary
category
WANTS —expenses
on recreation &
entertainment,
vacations, gifts,
similar other
expenses
Variable category
NEEDS—Expenses
on grocery,
fuel/transport, phone
calls, medical, similar
other expenses.
Fixed category
Home loans, taxes,
insurance, child
education, Insurance
premiums
Loans should not exceed
50-60% of income
Expenses that cannot be
modified
Average out your
expenses
Track your expenses for
2-3 months
Do not change the
spending habits

6. Preparing your Personal Budget(Step 4-7)
• Compare
• income> expenses
• Income< expense
• Income =expenses
Step 4
• Determine your financial
goals
• Child education/ marriage,
retirement
Step 5
• Improve your situation by
increasing your income.
• E.g alternative sources of
income or increment
Step 6
Step 3
Step 7
Review and evaluate
your progress

7. Additional Saving Ideas
 Cut down on unnecessary expenses least till the time your financial
situation is stabilised
 Keep a watch on your monthly expenses
 Invest a small portion of your income in the best available savings
schemes commensurate to your income
 Avoid using market credit (credit cards, personal loans etc) or if you
must, keep it at minimum
 Opt for additional source/s of income

8. Key highlights
 Devising a basic budget of personal finance is the key to financial security
 The basic comparison between income and expenses determines the financial
objective of an individual
 Monitoring is more important than planning, keeps you updated on a daily
basis and helps you remain on track

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