All companies, organizations, and even private individuals would always want to be on the earning side of the financial bargain, by living according to means, and having money left over at the end of every day. This method of giving money and receiving it is easier written and read about than implemented. There are emergency expenditures that have to be made, impulsive purchases that are often regretted much later, and the stress of work or school that can make even the best of us forget our budget.

A complete budget plan can help your company or organization spend money wisely. It can also help you avoid going into debt, by clearly outlining how much you get, how much you need, and how much you have left over. An effective budget plan will give its maker a clearer sense of what he or she can afford to buy, or what he or she cannot afford to. The rules of budget planning apply to the largest of companies, to the simplest of housewives working out their household expenditure, to even the student struggling to make the grade while making ends meet.

In broad terms, a budget plan involves three major steps: identifying the extent of one’s income, recognizing expenditures, and then calculating the balance.

Work Out Your Income

The first step in making an effective budget plan is to draw up how much money you will receive, whether in the form of allowance, salary, wage, or even loans. On a sheet of paper, make two columns, with one side identifying the source of the income, and the other citing how much income you will receive from the source.

Make three versions of this document. One version will outline your income weekly, the other monthly, and the third yearly. This can give you a chance to plan your immediate, medium-term, and long-term purchases.

Identify Your Expenses

It is now time for you to write down your expenses. On another sheet of paper, make two columns, with one side identifying what you will spend on, and the other citing how much money you need to spend on it. You will need to make three versions of this document. One version will outline your weekly expenditures, which can include food, office supplies, or toiletry. The second version will outline your monthly expenditures, which can include rent, electric bills, water bills, and Internet bills. The third version will outline your yearly expenditures.

Be very careful in listing down your expenses and leave nothing out. You may neglect to outline small travel expenses, such as short commutes, because fares seem to be low. On a weekly or monthly basis, such expenses may indeed make up only a small percentage of total expenditures; on a yearly basis, however, such expenses can make a dent in your income.

You will have to take note of two kinds of expenditure. Non-discretionary expenditure includes all your necessities; discretionary expenditure, however, may include spending you will do for pleasure, such as entertainment for company guests, eating out with friends, or clothes. You will also need to factor in debts and loans, such as those incurred using your credit card.

Find Your Balance

Add up all your income, then add up all your expenses. Subtract your total expenses from your total income, and you will have your net savings. If you have more income than expenditure, then you have saved money; if the opposite is true however, you will need to rework your budget so that you do not run into debt.

You can also download budget planners so that you don’t miss a thing when you put that budget plan together.

[image from FranklinPud]