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What is the Personal Budget? Definition and Aspects

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Definition of Personal Budget

At present, due to the economic setbacks and the fact that salaries almost never compensate enough to cover all needs, the budget tool is needed as a fundamental element to manage the family income. Therefore, the personal budget refers to the management of income received from economic or work activity.

The personal budget is the setting of economic goals based on personal economy, which arises with the setting of goals, managing one’s own income, either with the purpose of investing in a business, improving the quality of life with some independent project or simply planning an economic goal of acquiring a car, a house, equipment, family insurance, among other items and needs, which can be complicated to obtain immediately, due to the income received.

Know here about the budget

The personal budget can also be adapted to the family burden or activity that includes the same nature, a home budget is easy to do and works to keep track of expenses according to the total income of the household, so the budgeting tool can include your own income in conjunction with those of your partner or even children if they are adults and active at work.

There are several personal budget models that the family can use to manage money. For example, there is the classic fixed percentage model, which consists of allocating a percentage of three quarters of income in fixed expenses for the upkeep of the house, such as food and service expenses to maintain the stability of the lifestyle that the family leads, the last quarter can be allocated to savings for future projects, family entertainment, old age pension among other contingencies provided in the budget plan.

For the most thrifty families, only a quarter can be allocated to maintaining the family’s services and food and keeping the rest, in order to fulfill an ambitious project or the same purpose that almost all families in the world have, which is to prepare for old age and the tranquility of retirement, with medical support for multiple eventualities that may arise throughout life.

Definition of Personal Budget

An example of a personal budget, can be the expected vacation plan for the whole family, which depending on the destination, the stay and the luxury with which you want. Therefore, travel requires a large expenditure, and the greater the family burden, the greater the expense.

In this sense, if you have children, you must provide for children’s entertainment and care necessary for the child to enjoy the vacation, in addition to thinking about the couple, with whom to spend a weekend, inquiring about the costs of room services, daily meals that may include the service of up to 3 times a day, involving a significant expense. You should also include in the budget, the cost of shopping, or planning a sightseeing tour.

If the services are included, all this among many other options available to the tourist destination you want to visit, it all depends on the budget that the couple wants to establish to fulfill the dream of the family vacation trip.

Another example of budget, is related to the goal of buying a car for the family, which must be established in advance, the model of vehicle that is wide where the whole family can go, which saves fuel, has a sound system desired, which is a brand that represents a seal of quality and ease of repair or commercial movement if you want to buy another vehicle in the future. It all depends on the budget and how much you are willing to live to achieve this goal.

Another aspect to take into consideration when planning a personal budget is that if you plan to buy a vehicle and do not have enough monthly income you must make other family sacrifices, such as decreasing the frequency of shopping at the mall, or start the habit of preferably cooking at home in order to avoid overspending on food by paying restaurants away from home.

In addition, other plans can be made that you and your partner are willing to make to get the desired family car with all the expected features, including service offers, the expectation that it is a new agency vehicle, among other elements to be considered when acquiring a personal vehicle that fits all family needs.