Budgeting

We always hear the phrase “spend less than you earn”, but we also know that it is easier said than done. That’s why we came up with this topic to enlighten you on how to lighten your expenses.

Your money needs management. You’re allowed to tell your money what to do and where to go. One budgeting strategy is the 50/30/20 rule. This rule divides your take-home income into three categories; 50% for needs, 30% for wants, and 20% for savings and debt repayment. The cash envelope system is exactly what it sounds like. You put your cash in different envelopes based on the budget categories. You’ll decide what amount goes into each envelope based on your spending goal. For example, you might put $350 in the grocery budget and $150 in the fun budget. The key is that you’ll only be able to spend the cash out of these envelopes for the specific budget category until the next cycle of your budget.

Zero-based budgeting is a method that has you allocate all of your money to expenses, savings and debt payment. The goal is that your income minus expenditure equals zero by the end of the month. You can repeat expense categories and amounts every month or mix them up

        CREATING A BUDGET LIST

The first step to budgeting is creating a list. The process of creating a budget list is always advantageous, whether you end up sticking to it or you later fell out. It always limits waste and spontaneous spending; so be encouraged! To create a budget list;

v List everything you spend money on

v Allocate an amount to each item on the list

v Add tithe, miscellaneous, savings and some fun to the list as you may end up falling out if your budget is too strict.

v Plan for emergencies

v Control black taxes and lifestyle inflation

v Avoid bad debt as much as you can

v Save consistently as much as you can. Let your budget be friendly.

v Always plan out a surplus budget

v Always differentiate between needs and wants

v To create your list, make use of or tweak the 50.30.30 rule based on your financial goals.

Most of the population refer to budget as a mere expense list but your expense list may also contain all your expected income in the month; the income source and the amount. Creating s budget list will open your eyes to see if you will be at negative with your expense list. It also awakens you to probably consider starting to embrace some passive income sources. Hence, you’re at the advents of your financial journey. If you still remain curious about how to get hold of your finances, you should check our trending posts to see the MMM of finances- Making money, Managing money and Multiplying money.