How have you been doing your personal financial budgeting? Continue to follow this article to get the best way.

Today, let’s find out more about managing budget wisely.



Everyone needs a budget to control their money to meet their financial needs, and goals.

Budget is an important part in a financial planning. No matter how much money you make, without a budget it will be hard to manage and grow your money.

When you earn IDR 5.000.000 a month and spending IDR 4.000.000 on wants, you only have IDR 1.000.000 million left that is not enough to meet your needs in a month.

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This can lead you to have debts, and other financial problems. And that is why you need a budget. With a budget you will know how much to spend, where to spend, and how much to keep every month.

Especially during uncertain time like this, allocating money wisely will help you meet unpredictable situation with confidence.   


What is a Budget?

Budget is a plan on how to use money. It comprises of spending, keeping, and growing money each month.

Budget will change over time as there is always uncertainty. Have you ever felt that you do not know where all your money have gone after spending them?

With a budget you can avoid this and get a better handle of your money. So after receiving your salary on the beginning or at the end of this month, don’t go spending them right away. Create the budget first.  


How to Create a Budget

The benefit of having a budget is you will know in detail how much money to spend on the items you will buy.  

These are steps to help create a budget.


#1 Understand Needs and Wants

Begin by list all items that you will buy or save for in a month. Think about the items you have listed. Do you really need them or you just want them? Prioritize the items based on needs and wants.

After you set your priorities, you can insert them on your budget worksheet.

My Needs and Wants Need or Want Priority Scale
Pay rent need must have
Buy a new shoes want really want
Save for emergency fund need must have
Save for a holiday trip want would be nice
Pay off debts and other bills need must have


#2 Create a Budget Worksheet

After set your priorities clear, create a budget worksheet. A budget worksheet consist of total income each month including bonuses, tips, and other commissions, and monthly expenses.

Monthly expenses include saving, mortgage payment or rent, tax, debts and bills, vehicles, transportation, groceries, utilities, medicine, emergency fund, insurance, investment, entertainment, personal cares, child care, student loans and charity.

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After make calculation on your monthly total income, determine the expenses that will change from month to month such as groceries, gasoline, internet data, entertainment, and gifts.

The next step is to portion your income. The common rule is 50-30-20 where 50% go on essential necessities, up to 30% on savings, debts, and investment, and 20% on charity, entertainment, and personal care.

If you already married consult with your spouse on your budget plan. Or if you are a student, you can involve you parents so they know your financial needs and goals.


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Manage Your Budget

Now that you have known how to create a budget, the next thing to consider is to manage a budget so you can stick on your budget plan, and control your money wisely.

These are 11 practical ways to start managing your budget.


#1 Plan Ahead the Monthly Budget

Before receiving your salary or other income, create a monthly budget. Some company pay their employee at the beginning, or the end of the month, but some in the middle of the month.

To spend your money wisely, it is better to plan ahead the monthly budget. So after receiving the salary, you already know where and how much to spend them.  


#2 Automatic Saving

Set your bank account to automatic-saving mode. It keeps you to save money right away before making any spending on your monthly expenses.

You can manage up to 30% of the income to be saved automatically into your deposit account.


#3 Record Daily Spending

Write down all your everyday spending in a note, excel file or use Aplikasi Finansialku to record faster and easier.

In this way you can identify better where your spending go, what purchase or expenses that spend much money or beyond your budget, and the minor spending.

Make a routine schedule every day or every week to record all the daily spending.


#4 Plan Your Shopping

Plan your shopping. Create a shopping list according to your monthly budget and your meals plan. And always list the items you need before shopping.

This keeps you from overspending or impulse buying since you already know what to buy. Moreover, you don’t have to wander from one aisle to the others which saves you more time and energy.

You might want to include a category such as durable or non-durable goods to identify or prioritize the items. And look for discount or substitute for cheaper items.


#5 Pay with Cash instead of Using a Credit Card

Fees from a credit card transaction can add up to unexpected amount. So pay with cash instead of using a credit card to avoid fees when shopping or doing other purchases.

In this way you will keep your spending on budget since there are no additional fees.


#6 Keep the Receipt and Other Bill Notes

Some people might avoid this step for a practical reason. Though it seems to be a waste of time, keeping the receipt enable you evaluating the budget. Turn the receipt into your own price list and use it to calculate your next shopping trip.

Moreover, it helps you keep track of your spending each month. This also lets you make an informed decision on your deal since some items has a changeable price.

Besides, keeping other bill notes allows you to review your spending on unexpected expenses such as train ticket, parking bill, and other fees.  


#7 Save for an Emergency Fund

Life is full with uncertainties. Unpredictable things happen such as get laid off from a job, haven’t received salary for a month, a death of a family member, critical illness or accident.

To protect your money, save for an emergency fund. It will help protect your budget when those unpredictable events happen.

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The ideal amount of emergency fund is a total of 6 months of your monthly income if you are single, and 9 to 12 months if you are married and have children.

Save the money in a place that is safe, liquid, and can be converted into cash quickly. You can choose saving, deposit, mutual fund in the capital market, or gold.

The purpose of these investment products is to keep the liquidity in the short term period, rather than to increase your wealth. 


#8 Make Adjustments When Needed

Your budget will change over time. Meaning that each month you can have different amount on spending. It is because of your expenses besides the spending habits, and income.

If you haven’t received your salary for a month or two, you need to make a necessary adjustments on your budget plan.

Maybe you will need to cut down spending on entertainment, gifts, or other minor spending, and go on a tight budget.

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That’s why saving for an emergency fund is important. Expenses change overtime. For fixed expenses such as rent, and mortgage bills, the amount is the same every month.

However, variable expenses will change. So determine your variable expenses. They can be gasoline, groceries, internet data, entertainment, and gifts.


#9 Review the Spending Habits

If you love to spend money on expensive or branded items, overtime you will form a habit. Maybe you love to change a new gadget every three months to keep up with the trends.

Your spending routine will build a habit in a long run. How you spend your money, how much and where, will create a spending habit.

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Understand the spending habits will help manage money you already allocated on your budget wisely. With a monthly budget, the chances are you can review your spending habits.

Reviewing it regularly lets you know what items you spend more, and items you spend less. If your spending habit is more than your income, it will lead to a financial problem such as debt.


#10 Make a Realistic Budget

Plan the budget according to your monthly income. If you want to save for emergency fund for the next 6 months, and still overspending on shopping new branded bags you’ll not meet the goal.

Setting a realistic budget also means to make spending based on your income and need.


#11 List Things You Wish to Have

Work can be stressful and reduce your productivity if you are absent from having some fun activities. Sometimes it is liberating to write down things you wish.

So the next time you go to a store, you would not be bothered or automatically buy them because the wish list gives you time to reflect on your motive.



Budget is a tool to control you spending so you can manage your money wisely.

Having a budget will help you understand your needs and wants and build spending habits that fulfill your financial needs, and goals.

So, if you haven’t prepared a budget for this month, there is no better time than now. Go grab your pen, and paper, and write the plan down.


If you think this article helpful, share also with those whom you think might need this information.

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  • Rachel Cruze. December 11, 2020. 15 Practical Budgeting Tips. –
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