In the past two weeks, I shared the budget setting and budget stress testing. Those are major requirements in having a realistic budget.
Below will be sharing other qualitative factors to consider in ensuring that the budget is realistic.
- Once you have figured you have a positive cash flow make it a habit to put 10 or 20% of your income before deductions to savings. Also, you have to set aside 5 or 15% for an emergency fund, this is for that unexpected car repair, etc.
- If you have a negative cash flow, you need to do some spending cut off and make repaying debt goals. Try to stick to the basics remember this is just for a short while so that you can free some funds. Payoff those debts, you can start by clearing off the small debt and going up.
- Track your spending habit. Personal exercise l am currently doing. Keep all your receipts of whatever spend you are doing. Month-end take note of those receipts and factor them on the budget. Do a cost-benefit analysis to have a clear picture if that spend was justified or it was one of those impulse buying. The idea here is we want to instill discipline that we stick to the budget and avoid impulse buying or spending.
- Be realistic and committed to your budget so that you can be able to achieve those financial goals.
It’s OK to break the budget once in a while but don’t make it become a habit.
Author: Talent T Manyonga