6 Steps of efficient budget planning

6 Steps of efficient budget planning

We often think about planning our budget and keeping our home budget in place. But due to lack of motivation and streamline efforts we always fail to do so and end up spending much more than we have estimated. An efficient budget planning helps you to keep your expenses in check. You will see that with very minimal efforts you are now able to achieve your financial goals which seemed far distant.

In this article, I will be taking your through 6 steps which helps in efficient budget planning.

Start by setting the goal

You have to set a goal for yourself before you start planning. This will not only motivate you but also gives you a clear picture of the amount you have to set aside to reach your goal. The goals could be anything but sufficient enough to motivate you to start living on a budget. They can be short term goals which you wish to meet within a year or two or a long term goal like retirement or college education for your child. Write down your goal and by when you wish to achieve it.

List down all your incomes

Before you make your home budget make sure you identify all your income sources. This will help you to determine the exact amount you will have in your hand to spend each month. If you have multiple sources, include all earnings in your budget. If some incomes are variable find an average of these incomes to include in the earnings.

Categorize your expenses

Make a list of all your expenses. You can take help from your credit card bills, bank statements or grocery bills. Split these expenses into two categories as fixed and variable. Fixed expenses are those spending whose amount is fixed and where you cannot cut back like mortgage/ rent, utility bills, school fee etc. Variable expenses are such expenses whose amounts vary each month and here you can make changes if necessary like groceries, entertainment, conveyance etc.

6 Steps of efficient budget planning

Plan your budget

The most crucial part is to take into account of each and every expense. Start from absolutely necessary items to luxury and unnecessary expenses where there is more scope to cut down. Also don’t forget to set aside some money for seasonal expenses and emergencies. Ensure that you are also putting money into savings. You can use any excel budget template or printable budget worksheet for budget planning. The printable budget worksheet will help you get better control over the expenses. You will be able to track your budget more efficiently if you pin it to a place where you can see it regularly. This should have your income and expenses marked separately and your expenses categorized.

Review and readjust

Review your budget every month to see how you are doing. Which are the areas where expenses have shot up despite cutbacks and where is still some scope to save money? Accordingly, you should readjust to a more comfortable home budget. There may be some increase or decrease in your income as well; accordingly, you will also have to make changes to suit your needs. You will also have to make certain adjustments in your lifestyle to start living on a budget. It can be done by focusing more on what you need than what you want.

6 Steps of efficient budget planning

Follow these few budgeting tips to make your budget planning smoother:

  • Some expenses may look like necessities but can be a source of savings. For example, you can remove a subscription to those channels which you don’t watch to reduce your cable bill or you can start walking / cycling to nearby places to save some gas.
  • Initially, you can track your progress weekly so at the end of the month you don’t get any surprises.
  • Put the unutilized money from the allocated head of emergency into your savings. This will help you get to your goal faster and motivate you to save further.
  • Review your daily spending.


When you prepare a well-structured budget and start following it, you will see that gradually your spending habits will also adjust to it. Initially, you may feel a little difficulty but with time you will start following the discipline. You will be surprised to see with small savings here and there a lot can be achieved. When earnings are limited and goals are difficult, following a budget is always is a good idea. There is no right or wrong time to start following a budget. I personally think one should start this practice as early as possible to achieve your financial stability.

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