It is now difficult to manage a budget due to rising prices and incomes that do not increase or do so at a slower rate than prices. From the looks of things, there are tougher times ahead.

Just because it might be hard to balance a budget now doesn’t necessarily mean it’s a bad budget. If it’s a good budget, it’s easier to make adjustments.

Here are some characteristics of a good budget.

A good budget is written and structured to match your personal situation and spending habits, is based on accurate income projections, and includes income from all sources. It fully accounts for all expenses, makes accurate projections, and includes savings as major expenses.

A good budget is so structured that it’s easy to identify spending patterns, including cash spending, and makes it easy to identify and analyze variances. It also has enough categories to let you see where your money is going and is structured to show the natural inflows and outflows of money, but covers a long enough period to facilitate systematic planning.

It is natural to expect prices to rise, so you need to leave room in the budget to accommodate such increases, but it can be very difficult to anticipate the magnitude of price increases. This is why it is important to have a line for contingencies and to review and update the budget periodically to reflect the current situation.

Do you notice that even governments review their budgets and therefore present supplementary budgets if necessary?

Budgets do not balance because cash outflows are greater than cash inflows. Here are some possible reasons. Money is spent on items not included in the budget, more is spent on some items than expected, some expenses are underestimated, the budget is not adjusted for price increases, and inadequate provisions are made for emergencies. On the other hand, revenues are overestimated.

At times like these, it is essential to regularly review the budget due to the frequency and level of price increases and make any necessary adjustments. With so many people, for example, owning motor cars and gas prices trending north almost daily, budgets are bound to be negatively affected for motor vehicle owners.

How to remedy such a situation? Car owners may have to reduce their trips or resort to carpooling, which could cause some inconvenience. If individuals are not ready to manage their gasoline expenses, it is either that they are reducing their expenses on other items, or that they risk reducing their savings capacity or having to manage a budget. imbalance.

Some people might be tempted to maintain their way of life by borrowing, but this solution could create serious problems in the future. On the one hand, the loans must be repaid and at a cost – interest. This approach then really postpones the problem and, in fact, makes it worse in the future.

Now is not the time to buy on a whim. Sticking to the budget and the shopping list, avoiding places and associates that might cause you to spend against your best judgment is essential. Prioritizing cash spending and controlling the credit card and checkbook are also essential.

Whenever possible, buying at levels to get discounted prices, even if it requires combining your purchases with those of family or associates, can be worthwhile.

It is also important that a responsible family member manages the budget and ensures that all family members adhere to it. The removal of less important items from the budget could be considered to allow for the purchase of more important items.

Reducing the amount spent on discretionary items like entertainment can help. This does not necessarily mean reducing the level of entertainment. Changing the form of entertainment or joining others could reduce its cost.

Variable expenses allow a certain flexibility, but some, such as the cost of water and electricity, whose tariffs tend to increase, are more difficult to manage, so it is advisable to endeavor to reduce the maximum consumption, paying particular attention to meter readings.

When prices rise, savings potential decreases and the standard of living tends to decline. Some people are able to counter them by increasing their earnings from work. Others increase their non-cash income by doing for themselves what they would normally pay others to do.

If it is not possible to increase income, it seems that in addition to spending on cheaper substitutes, the inevitable and bitter solution is to cut spending to match the amount available to spend.

Some individuals have very little leeway. Nevertheless, every effort should be made to manage resources effectively.

n Oran A. Hall, author of Understanding Investments and lead author of The Personal Financial Planning Handbook, offers personal financial planning advice and guidance. [email protected]