4 Reasons Why Budgeting Is Important For A Salaried Professional




Budgeting does not mean you become a miser, trying to save every single penny. A good well-structured budget provides you, a salaried professional, great opportunity to experience a comfortable lifestyle with reduced financial stress. A good budget will help you plan for emergencies and celebrations.

A crucial point to remember is that you cannot increase your monthly salary at will. So with your income being static each month (unless you get a pay hike) you will need to limit your expenses to be able to save. Add to that your marriage expense, maintenance or purchase of a car, wedding anniversary party and gift etc. Rise in prices due to inflation doesn’t help either.

Whether you’re a low income salaried professional or take home a large paycheck, you still need to have a budget made. Fixed incomes and ambitious financial goals or dreams make a budget most essential.

Having a budget does not also mean that you don’t have to apply for a loan. A personal loan is a good option when you need quick cash without any hassles or time delay. If you are the only working member in a family, then purely via savings or investments, it would be hard for you to, for example, improve the house, without a personal loan. A loan will include EMIs that need to be paid each month. This EMI will show on the expense side of your budget.

Simply making a list of expenses versus income and jotting down numbers under each column daily won’t give you financial security or freedom. You have to analyze and implement the budget in your financial decisions. A budget will indicate warnings when you move away from the financial plan. Not having a well set budget will either leave you without a plan or without benchmarks to compare to previous month’s target towards savings.


Let us look at 3 reasons why a budget is important for a salaried professional:

  1. Focus towards a Financial Goal

A budget helps you get an overall picture of what your finances are and how money flows in and out of it. The goal is to have all possible information including your bank statements (slips, receipts), credit card information (payment statements), salary slips etc. of the past 12 months if possible.

Then find the average amount you spend monthly and break this down into segments like fuel, gas, entertainment, household expenses, insurance, debts paid, medical expenses and end-savings per month.

Try to balance the income with the expense. This will show if you are in surplus (more income less expense) or in deficit.

Setting timelines for your goals is also a good practice. For example, you can start a small fund to save for travelling abroad and keep a target of 6 months to do so. You can then judge how much you need to allot every month towards the fund.



  1. Prepare for emergencies

Emergencies crop up any time. It could be layoff from a well-paid job, illness, accidents, death in the family, divorce, bad investment decisions etc. A well-structured budget can help you have the savings needed to prepare for an emergency. If it is possible, try preparing an emergency fund out of the budget. This spare money can also help you get out of financial debt should the need arise. Align the emergency fund to your budget and start with small savings.



  1. Bad spending habits

Over use of credit cards can lead to serious repercussions on your budget. Sticking to your budget also involves spending via credit cards at a minimum and where necessary. It seems much more fun to go on a shopping spree over Amazon’s Great Indian Sale rather than to saving now for a dream holiday same time next year. Sure, the offer is now and it has to be availed of but do you really that expense? Do you really need a cable connection plan that includes 60-70 channels or 25-30 pair of heels? Good budgeting is important to help you re-think your spending habits and focus on your financial goals.



  1. Wealth building and peace

A good view of your financials will help you stay firmly focused on wealth building. You need to save so you can someday have a grand wedding for your children or be secure during your retirement. Budget is important to eliminate debts which when done helps you to re-direct that money towards your savings.

If you don’t have a budget in place, you will not be able to afford a new flat screen TV, a swanky new car or jewelry for your spouse.



Budgeting is mostly avoided by salaried professionals due to work or other priorities. It is a great way to save you the grief of overspending and falling into debt. It does not stop you from enjoying your life but actually ensures that you enjoy your life in a planned way.


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