There are three ways people budget their money. The first is not budgeting at all! They just spend money mindlessly, not giving any thought to whether they are able to save money for future needs. If not planning is planning to fail, then not budgeting is budgeting for financial failure.
The second way people budget is by budgeting their expenses to fit their budget. Only if there’s extra at the end of the month will they put something in their savings account for future needs. And if there’s none at the end of the month there’s no savings
The third way is the wisest and the most effective way to budget. Under this approach, a person decides to commit to saving a fixed amount of money every month. They put aside this amount first, and whatever is left is for spending. Under this approach, saving money isn’t a contingent activity but a regular and consistent one. Hence, using this budgeting approach will significantly raise your chances of being able to successfully and consistently put money aside for your future needs.
In this book, as well as budgeting, we’ll also talk about other peripheral personal finance topics that are central to understanding and appreciating the art and science of budgeting. We’ll also briefly touch on what personal finance management is in general as well as savings and investments, so you have a better grasp of the importance of budgeting. By presenting a holistic view of budgeting, the likelihood of you being in a better position to manage your finances will be much higher.