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Importance of a Budget

A budget is a plan of how you are going to spend your estimated total income before you spend it!

It is a summary of estimated income and how it will be spent over a defined period.

Money, like any other resource, needs planning. A little bit of planning and preparation can go a long way in helping you achieve better financial health. When you actually put your expenses and your incomes down on paper with some kind of plan, then that is when you can really figure out how healthy your finances are and whether certain changes need to be made or not.

As an estimation, a budget is a tool that allows you to think carefully about how you income will be divided among necessary living expenses, savings and investment during a certain period.

What information does the budget give you?

  • Different types of income sources
  • Amount of income by source
  • Total planned income
  • Types of expenditure, including business and household expenses
  • Total planned expenditures
  • Total savings