What is Budgeting?

Budgeting - The Most important Exercise

Budgeting is not a new concept, since childhood days we have been taught that we have to spend less than we earn. If we spend more than we earn then we will be in negative cash flow to avoid this we will always have to spend less than we earn otherwise we may not able to survive in long run.

Budgeting is the most important financial planning exercise. I know we all find it boring exercise, but cant help it’s very important and we cannot avoid it.

In simple words budgeting means keeping track of your each and every expense, income and cash flow. At a regular interval you have to check your cash flow. Do it periodically may be once in a month, once in a six month or a year. No need to make it complex just check how much you earned and how much you spend.

Once I saw a online complex budgeting tool on ICICI website but due to its complexity I didn't got interest in it. Of course there may be lots of other online software tools, I seriously doubt if anyone is using them. No need of any complex tool just keep a small diary or book and keep record of your each and every expense. You may also keep an excel sheet in your mail box and update it according to your cash flow.

Budgeting is the most important financial planning exercise without which you may not able to keep track of your cash flow.