Have you created a budget in the past? Were you able to firmly follow through? What were the obstacles that you have experienced?
It comes as no surprise that budgeting is no easy feat! It is a strategic task that encourages cutting down of your expenses. Furthermore, you must find a way to still enjoy the money you earn. Striking a balance between your needs and wants can be stressful for some.
So, where must you start?
Start accept your accountability over the choices you make. Every action has an equal reaction towards your wealth. Regularly subscribing to designer shoes can take a toll on your income. While, decreasing your trips to the coffee shop can help save cash. With this form of thinking, you will practice financial self-awareness.
Financial self-awareness comes the observation of thoughts, feelings, and actions surrounding money. For instance, you will be more aware of temptations such as the “cheap” 24-hour marketplaces.
TYPES OF BUDGETING
A Traditional Budget maps out a plan for how you expect to spend your money. It indicates the amount of money you allot during a specific period of time for a specific financial obligation. How much will you set aside for rent, entertainment, or insurance?
B. 50/20/30 Rule
The 50/20/30 rule is a proportional guideline that helps you establish good habits through the alignment of saving goals. 50% of your income shall go to essentials, 20% of your income shall go to savings, and 30% of your income will be spent on the unnecessary personal expenses.
C. Envelope Method
Envelope method is a simple way introduce you to budgeting. Begin by track the last month’s spending. Highlight your fixed and variable expenses. Then, devise a plan that will consist of different categories. Segregate each category into various envelopes. You must strictly follow through the allocation of each envelope. Do not get money elsewhere.
D. Event-based Budgeting
The last type of budgeting revolves the life events such as weddings, funerals, vacations, and special holidays. Tweak your budget in accordance to these events.
Budgeting lies at the foundation of each and every financial plan. It is about understanding how much money you have, where it goes, and how to allocate those funds. Best of luck! 🙂