Introduction
Budgeting is the process of creating a, usually weekly or monthly plan to manage money by tracking income and expenses.It is a financial planning tool that helps individual and businesses balance spending with earnings, avoid debt, build savings and achieve financial goals.
Budgeting is important because it helps you prioritize spending to ensure enough money for necessities and enables saving for long-term goals like buying home or early retirement.
As a working professional myself, my target audience/learners would be the single working professionals and budgeting 101 would help them create a budget plan, track their expenses and possible build a saving goals for their future families and retirement. This will be discussed at the start of a semester and will be followed through and be evaluated until the end of the semester.
Task
Students should be able to create a budget plan for a specific semester and later on we will evaluate who got the highest saving percentage.
How to do a Budget Plan?
1. Make a list of your bills and other expenses and the amount. Bills include things like electricity, water, internet or telephone bills. Expenses are things you spend money on, like food, clothes, tuition, school expenses and entertainment.
2. Use your pay slip to write down how much money you make each month. Include any other source of income like passive income from investments, like rental income or any other side hustle.
3.Subtract your monthly bills and expenses from your monthly income (#2). The result should be more than zero. If the result is less than zero, you're spending more than the money that you make. Look for things in the budget you can change.
Process
A budget is something you use/follow every month.
1. At the beginning of each month, make a plan for how you'll spend your money in that month.
2. Each day, write down what you have spent.
3. At the end of each month, see if you spent what you planned.
4. Use the information to help you plan the next month's budget. Are the there things you want to spend less money on next month?
5. You can put leftover money into savings every month. Saving money can help you during an emergency or if you need to pay something bigger like a trip or you have plans to buy a car in the future.
Evaluation
Evaluating a budget plan involves comparing actual income and expenses against budgeted amounts, typically on monthly or weekly basis, to identify variances. If you think you have overspend on a specific week, try to tighten your spending on the following week. In this way, you can monitor if the budget for the month will be enough or you can still save from your budget.Below would be the steps on how students would be able to evaluate their budgets.
Steps for Effective Budget Evaluation
1. Gather Actual Financial Data- compile all actual income and expenditure data from pay stubs, bank statements and invoices.
2. Perform Variance Analysis- compare actuals to the budgeted figures, calculating both the absolute Peso amount and percentage difference.
*Favorable Variance- higher income or lower expenses than planned
*Unfavorable Variance- lower income or higher expenses than planned
3. Investigate Causes- determine why variances occurred. Analyze whether they were due to timing differences, unexpected expenses, or unrealistic assumptions.
4. Review Budget Assumptions- re-examine the underlying assumptions of the budget plan. Evaluate if the projections were too optimistic or conservative and adjust them to better reflect reality.
5. Implement Adjustments- Use findings to revise future budgets or implement cost controls.
Based on the results of a semester student's budget plan, the teacher will be able to evaluate who among the students get the highest saving percentage and will get higher grade.
Legend and corresponding grade
41%-50% savings - 1.25- 1.0
31-40% savings- 1.5-1.75
21-30% savings - 2.0- 2.5
11-20% - 2.75 - 3.0
10% below- 4.0
0% - 5.0
Conclusion
Budgeting is neither an easy task nor difficult to maintain. It depends on the persons spending habits. If a person will stay on the budget plan, then things will go smoothly as planned. An individual can assess if his cash flow is enough to meet current expenses. He should identify non-essential expenses which can be reduced or eliminated. Then, he can evaluate if the budget was too tight, too loose or based on accurate historical data. Then, check if the spending aligns with strategic goals or saving targets. If an individual sticks to his budget plan, then saving goals is not impossible.
Credits
https://consumer. gov/your-money/making budget
https://google.com/what+ is+ budgeting+and+why+is+it+important
https://google.com/how+to+evaluate+a+
budget+plan