Best Ways to Budget Personal Finances Life Sciences Research Paper (Research Paper Sample)

What are the Best Ways to Budget Personal Finances?
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What Are the Best Ways to Budget Personal Finances?
Management of personal finances is an effective way of dealing with competing financial needs. A budget helps an individual in reducing impulsive purchases and ensuring that urgent situations are addressed without difficulties. The financial plan outlines all the possible sources of income, and it stipulates all the areas that require financial intervention. A detailed personal budget helps one in making informed, accountable, and responsive financial decisions. Therefore, the best ways of personal budgeting include the assessment of the economic situation, prioritization through goal setting, and consideration of all opportunities.
First, evaluation of the financial position is a prerequisite step in the development of an achievable personal budget. According to Koh (2012), it is invaluable for one to evaluate his or her income sources, monetary needs, and savings prior to the development of a financial management plan. Assessing the financial situation also means identifying all the available assets and liabilities to have a holistic understanding of one’s economic status that informs what to be included in the personal budget (Murphy & Yetmar, 2010). It is also critical for a person to organize all crucial financial documents to ensure an adequate assessment of the situation when planning personal income. Such information may include receipts and annual or monthly bank details that help one in tracking all the cash flows in a given month or year. Therefore, assessing the situation acts as a compass that guides the process of personal budgeting.