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Long Term Budgeting

Are you sure that you will be able to buy all the comforts you deserve? That food processor you always wanted could be left out every year. While day to day items are bought for household use with a monthly budget, the once in a lifetime expenses are usually left unplanned. To buy your house, car and consumer durables in the prime of your life you may need to apply long term budgeting.

Long term budgeting measures across 10 years and is updated every year. Making the long term budget comprises a few simple steps:
Step 1: Stating Annual Income over 10 Years
It is best to be conservative while making this estimate. It is okay to estimate a lower but surer income so that you do not fall short of money.
Step 2: Counting in Basic Expenses and Savings
This implies calculating a monthly expenses number. This is then used to make an estimate for every year. Make sure you consider inflation. Expenses increase as time passes. We also add important savings for retirement. We have counted in the bare minimum expense required for the family to survive.
Step 3: Left Over Income for Budgeted Goods
With the money left over one can buy goods like TVs, computers, a big car and long vacations. List these out in the order of priority and buy something every year.

In this manner long term budgeting moves across your life and helps you acquire the comforts of life in a well though out way.

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