A budget is an estimation of revenues and expenses over a specified future or period of time. In other words a budget is financial plan for defined period. To successfully manage your financial side of of your life, you need to have a budget that will assist you in the ways you spend and the savings you make for yourself. It was always difficult for me to stick to the budget as I would spend a lot and go way out of budget, this affected my savings. It is important to deal with our finances at an early age especially when we have a few responsibilities.
Do you have a budget or financial plan?
Budgets vary from person to person because we have different income streams – whether it’s a monthly or yearly budget. It is the religious following of one’s budget that you are able to determine if you can handle more money and responsibilities. You will probably roll your eyes if you are reading this in Zimbabwe because of the currency changes and inflation, but that should not let you not have a good relationship with your money and how you spend it. It’s best to take charge of your finances before they take charge of you.
It is important to have a personal budget, this is greatly encouraged. Personal budgets should include the monthly bills as this will help you have a clear vision on how much you spend, save, whether to increase your income or reduce what you might deem unnecessary.
It does not matter the amount of money you make per month or year, it is important to have a budget. Here are a few tips that could help you too in creating your personal budget:-
- Take note of the money you make/ income
- Track your spending- at the beginning this will be the most difficult step because you have to cut ‘unnecessary spending’ and make sure you spend within the budget.
- Set goals- state what you would like to achieve financially? It is also important to have timelines for the goals you set that way you will able to determine the amount you spend and save. It is a way that can help you reduce expenses.
- Adjust habits if necessary- (refer to step 2)
- Keep checking in- Constantly go back to the drawing board, evaluate yourself, be accountable of your actions and take note of the progress you would have taken since you began.
The whole purpose of implementing a budget is to make you the master of your money, rather than let your money control you- Grant Sabatier
Ever heard of the 50/30/20 budgeting rule, well it is a budgeting rule or method that can help you manage your finances effectively, simply and sustainably. The basic rule is to divide your income into three sections; 50% needs, 30% wants and 20% paying off debts. Being able to distinguish on the want and needs is immensely important. It is called setting the priorities straight and following through a path to financial freedom. I believe whilst you are in your 20s it is important to have control of your finances, so that it is easy to uphold a household budget.
To achieve financial freedom you need the ability to have self control when spending. The sooner you will learn the of delaying gratification, the easier you’ll find it easy to keep your spending and spending habits in check. One step at a time in following your budget and you will enjoy your life with worrying about your finances.
It is important to create your personal budget and these sites were quite helpful and can give a head start on why its important: shesavesshetravels.com and millenialmoney.com. These two sites are really good and give useful tips on budgets.