Budgeting is the first step towards financial freedom. We know how important budgeting is yet we fail to do it. People budget in different ways.f I use both my Budget Planner as well as an excel sheet. I prefer the Budget Planner for my personal finances because it’s more than just a budget planner and it has income goals, financial goals and a calendar of upcoming big expenses.
A budget is telling your money where to go instead of wondering where it went – Dave Ramsey
- Why do you want to budget – We hear the word “budgeting” thrown around all the time but did you know very few people actually do it. People who live on a budget are less likely to live paycheck to paycheck and have less financial worries. You need to identify your purpose of budgeting eg getting out of debt, saving up for a future project or even reducing unnecessary spending.
- Be honest with your current spending habits – You need to take a deep dive on your current finances and how you spend your money. Be honest with your current lifestyle and how you spend your money. The easiest way to do this is by writing down all your expenses every day for 30 days. You can do this on an excel spreadsheet, mobile notes or a notebook.
- Beware of Irregular expenses – These are those types of expenses that are not planned for the month and can really throw you off if you don’t account for them. An example of such expenses is Baby showers, Birthdays, insurance premiums, medical, etc These you need to account for these in your calendar. The budget planner has a page specifically for such expenses.
- Account for all your income – If you have multiple sources of income you need to take into account all of it and if the income is irregular the best thing would be to pay yourself a salary and save the rest. This saves you during the months when you don’t have money coming in.
- Create Financial Goals – Most people who are keen on budgeting want to accomplish more with their coins. You can align your budget with your goals and decide how much you need to set aside to accomplish the goals. Your goals need to be specific eg instead of “save for school fees” it should be “save kes 70,000 by May 2020.” Goals should have a deadline and an action plan. The budget planner includes a Financial Goals page as well as an Income Goals breakdown. This is the most important part of budgeting. If you don’t set goals, you’ll shift to spending the money.
- Save up – In order to make saving for your goals easier, breakdown the payment to months or weeks. If you need to save kes 70,000 for school fees in the next 4 months, that translates to kes 17,500 per month and which becomes kes 4,375 per week. It becomes easier to think of ways to generate an extra 5k a week as opposed to 70,000. If setting goals is too tedious for you, aim to save at least 20% of your income.
- Involve your partner – We all know that money is the leading cause of relationship stress. If you have a life partner it’s best to involve them in the budgeting process. If you’re not on the same page with your partner it could hinder your financial success. If you’re single, then this point doesn’t apply to you.
- Budget your income accordingly – it’s important to budget for everything. Don’t deny yourself the good things instead account for them. Going out and having fun is important in this life; account for it and stick to your budget. Account for your internet, airtime, etc
- Put it on record – Budgeting in your head is not a thing so don’t even attempt it. You need to record your daily and monthly income and expenses without fail. This is the only way you will be able to track your finances. You can use our Budget Planner as well. Once you purchase it, feel free to print it as many times. You can file it under your finances and even break it down month to month. You will be able to easily track your spending and growth.
- Hold yourself accountable – Making a budget is one thing, sticking to it is another! If you know you struggle to save, do a monthly standing order and automate the payment.
- Do a monthly review – Budgeting is a continuous process and you need to review your finances month to month. By doing this, you will be able to establish how much you overspent, how much you had left in certain areas. This will help you adjust the budget accordingly.