Budgeting involves allocating your funds to different needs of your life. Budgeting and spending generally depends on how much one earns and the frequency at which they get money. Majorly income is inform of salaries, wages and profits which also comes periodically like monthly or weekly. Whichever bracket one is in, it is very important to track our expenditure. This helps us to pay for everything effectively like bills, groceries. Budgeting also helps us meet our savings and long term investment goals.
In order to budget well, one has to first know their:
- income and frequency of earning
- weekly or monthly expenses
- Savings and long term investment goals
- Needs and wants
With these in mind, one can then decide how much to spend on each and allocate funds appropriately depending on how much they have. After that, they can make a budget and spend accordingly. Budgeting is not hard and can be done by anyone regardless of age. It’s always better to have a physical budgeting book or planner but there are lots of applications and software that can help you do that. These can automatically pay your bills, send money to your bank and even collect recurring payments. You just have to find what works well for you.
In order to budget effectively, one’s expenses majorly fall into the following categories.
CATEGORY 1: THE MUST HAVES
These include: an emergency fund, home utilities, bills, groceries and debt payments.
CATEGORY 2: THE SHOULD HAVES
These include: savings, investments and debt over payments
CATEGORY 3: THE NICE THINGS
These include: new clothes, toys, travel, and experiences.
With the above categories in mind, one can then make a very good budget that caters for all their needs allowing them to be sustained while being happy and meeting their savings and long term investment goals at the same time. Budgets can be made depending on frequency: daily, weekly, monthly or even annually. However with all the shiny objects and people please syndrome in society today, it takes a great amount of discipline and dedication to create a budget and stick to it. You just have to control your spending habits so that you can meet your savings and long term goals in order to make your dreams come true.
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