A Personal Budget: a Healthy Programme for Financial Freedom
If you are reading this, you’re most likely searching for a way to get control of your finances. Formulating and committing to a monthly budget has always been one of the ideal ways to do this. Having a sound budget is important for managing money, one that has allowed me to get on with my day to day life even on limited funds. One of the most critical things that I do every month is planning my monthly budget, this has allowed me to systematically meet all expenses, grow my savings, and reduce debt.
I usually map out my budget for the upcoming month close to the end of the month. This will prepare me of what’s down the road. It’s not a good idea to prepare a budget after getting paid because, too often, that flush feeling of receiving a paycheck leads to unessential and spontaneous spending before the paycheck ever reaches the bank.
Start your personal budget by outlining all the things that must be paid that month like rent, electricity bills, insurance policies, loan repayments and telephone bills. The general idea is to apportion a budget for the things that I must pay to keep a comfortable roof over my head and carry on earning money. I like to pad these essentials to produce “money back” after paying the bills and, if costs increase circumstantially, I’m always covered.
Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely unavoidable. These items include monthly savings deposits, credit card repayments, and donations to charity. Don’t get me wrong, some of these things are also essential, but in case of emergency they can be excepted. By paying credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget does not include the cost of food, clothing, or entertainment. These items get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of handling my monthly budget has worked out very well over the long term as long as I observe it scrupulously.
