What is a budget?
It is a financial plan that allocates income towards expenses, savings, and debt. Budgeting is a way of foregoing instant gratification and sacrificing for the future. It’s a control check to make sure you know where your spending goes rather than wondering where the money went.
What you need to do before starting with the budget:
Track how much you are earning that is all your streams of income e.g salary, side hustle income, etc
If your income is more than your expenses you have a positive cash flow, with this extra income you have to plan on saving or investing it. If your expenses are more than your income it’s a negative cash flow. In this case, you have to figure out what needs to be cut down on the expenses. Discipline here plays are vital role try to live within your means.
Make a list of all your expenses.
Recommendation; go back to several months before and track your expenses either on your bank statement or check how you have been spending. List down everything.
Stick to the budget.
It will not make logical sense to write down a budget that you will not follow. As you write it down make a commitment to follow and stick to it. Do not spend on what you have not listed as an expense for that month or year. Even if you get it on a special or bargain.
Why is it important to do a budget?
- It helps in avoiding spending in areas which are not a necessity which are cutting in your financial goal.
- It will give a clear indication of where your money is going and helps in planning the future.
- It ensures that you will always have enough money for the things you need and which are important to you.
- It will keep you out of debt or help you work your way out of debt if you are currently in debt.
Learn to manage the little money you get to attract more money.
2020 may it be a year to take ownership and responsibility of our finances, it starts with you as an individual.
Author: Talent T. Manyonga