Being able to make an effective budget is one of the most important steps to achieving any short or long term financial goals. Often people in comfortable lifestyles make the lethal error of thinking, “I make a good income, why would I need to budget?” However, this is a misconception in financial management, as budgeting is not just for those who have an economically challenging income. Budgeting gives you a clear idea about your expenses and unnecessary expenses to achieve your financial goals and dreams. As the new financial year dawns upon us, follow these steps to create a yearly budget to help you handle your finances and manage your money better.

1. Study past spending patterns
   The first step in the budgeting process is to estimate spending done so far in order to estimate of how much you will spend in the upcoming financial year. Get a hold of all your past bank statements, credit card bills, cheque books, utility bills, receipts, online payment accounts, life insurance or term insurance premium payment slips for the past year or past few years to help you estimate accurately how much you anticipate to spend. It is important to be as thorough as possible in this step so that you don’t miss out on any big-ticket expenses which can throw off your entire financial plan in the middle of the year.
2. Calculate your expected income for the year
   The next step is to calculate how much you expect to make in the upcoming year. Here it is critical to include all income and not just your salary. Any income coming in the form of alimony payments, child support, rent, interest, dividend, tips, wages, freelance income should all be included in this list. Projecting your income correctly will be critical in the budget-making process.
3. Project upcoming expenses 
   While examining your past income can help give you an idea of how much you will spend for this year, it is important to acknowledge that every year is different from the other. If you are considering putting a down payment on a car or a house or taking a vacation or simply paying a premium for a new life insurance policy which will take a toll on your wallet, ensure that you account this in your budget. Expenses can vary from year to year, and being able to estimate what you will be spending money on will be more or less critical to the accuracy of your budget.
   
   It is also a good idea to have an overall look at your expenses at this stage and decide where all you would like to make cutbacks. Petty expenses such as buying coffee at work every day or having 6 magazine subscriptions may not seem like much, but they add up. Look through your monthly expenses and eliminate any unnecessary purchases you may be making. If you have a tendency of forgetting to pay bills on time and spending money on late fees, it might be a good idea to enroll in an auto-pay plan at your bank. It is also advisable to review your financial priorities at this stage. With each passing year, your obligations grow and you may want to invest in your financial future by adopting a term plan or a health insurance plan that offers more coverage. Remember every little bit matters!  
4. Balance your budget
   Finally, after you subtract your expenses from your income, you can be ensured that your budget is balanced. In case your planned expenses are exceeding your income, you can decrease your spending to save for your financial goal. Also, keep a track of your operational and occasional expenses.
   Having a well-balanced budget is critical for your financial future and well-being. Ensure you spend adequate time in making accurate predictions for your budget for the upcoming financial year as this will be detrimental in the way you spend and manage your money.

To know more about term plan, life insurance, term insurance, long term savings visit PNB MetLife website.