Identifying income and expenses in a given period of time and based on that, organizing your financial responsibilities is the objective of having a budget. Shutterstock/The Republic.
In order to make a balance and a better distribution of the obligations that we will have throughout 2022, since the beginning of the year it is recommended to make a budget. “Budgets are part of the financial planning that we must carry out in order to have a clear picture of our income and expenses and thus be able to meet the objectives set for the year,” said Annabelle Ortega, Executive Director of the Chamber of Banks and Financial Institutions. .
The main objective of having a budget is to identify the income and expenses in a certain period of time. The most common practice is that they are made on a fortnightly or monthly basis, according to the frequency in which the money is received.
That is why some advantages to getting organized on a budget are:
• Knowing how much money is received in the household.
• Knowing how much and what the money is spent on.
• Adjusting expenses according to income.
• Setting savings amounts to achieve our goals.
• Contemplating savings for emergencies.
• Reducing the risk of defaulting on financial obligations.
• Establishing the priorities that you have.
• Being clear about the reality of your financial situation will give you the opportunity to make adjustments when necessary, so as not to neglect your stability.
• Allowing you to make month-to-month comparisons of your consumption and, therefore, determine which expenses you can adjust.
• Making it easy to take control over your finances.
“If, when making a budget, the person determines that despite the adjustments made they will not be able to face the different loans or debts they have, it is important that they approach the bank or financial institution with which they have their debt and expose your situation, so that together you can find the best financial alternatives that allow you to meet your credit obligations”, said Ortega.
On the other hand, the budget allows identifying the elements where the highest percentage of expenses is concentrated and making an analysis to assess whether it can reduce them. It should also be taken into account that making a budget will reveal the level of indebtedness and thus determine whether to limit the use of loans, or if required, you can acquire a new one.