Making the best out of your budget in a crisis

We've all been through wanting to buy something and not have enough money. Most of the time we can't figure out what we're spending our salary on and we're always thinking about how good it would be if we earned s bit more.

A personal budget helps you make the most out of the available financial resources you have so you will be able to take better decisions when you want to make new purchases or investments. By building a personal budget you will have a better understanding of the sources of income and expenses you have month by month.

Your personal budget must take into account the revenue and expenses you have each month. We all have a general idea of these figures, but if you put them on paper for sure you will discover things you didn't expect.

Monthly income can be of many kinds, so it's important to keep track of it so you can budget your monthly expenses correctly or plan a new holiday. In principle, income can be divided into two broad categories: recurring income and occasional income.

Recurring income may be:

- Salaries

- Rental income

- Allowances

- Other income that you can rely on for a period of more than 6 months

In the category of occasional income you can include:

- bonuses

- dividend income

- other income that you cannot forecast from one month to another

Given these income categories the safest would be building a personal budget based on recurring revenue. Using only secure income you will have no surprises when you have to pay the rent or credit card.

Based on your personal budget, you know how much you can spend each month and how much you can put away. A structuring of expenses helps you a lot to improve the degree of saving.

The main categories of expenses that you should consider would also be of two kinds, as in the case of income: recurring and variable.

Recurring expenses could be divided into:

- housing expenses:

o rent or bank loan,

o maintenance and utilities (water, gas, electricity),

o other expenses directly related to your home (internet, TV)

- expenses on car or public transport:

o monthly payment, insurance, fuel, tune-up,

o and if you don't have a car you should take into account the monthly cost of public transport

- personal expenses:

o subscription to the gym or salon,

o care products,

o other expenses that you know you have every month without exception

In the category of variable expenses, you could count:

- expenses with relaxation and recreational activities: city outings, city-breaks or holidays

- expenses on clothing, footwear and online shopping

- food expenses

- any other expenses that you cannot forecast from month to month

In building your personal budget, you should also consider the 'unforeseen’, those expenses that occur very rarely, such as replacing the washing machine or a faucet on the sink, so a separate section of the personal budget should be allocated to such expenses.

The personal budget is an instrument that we should give more importance to, so that we can develop a healthy and forward-looking financial education.