5 tips to budgeting right
September 28, 2020
- Know what you earn. No, this isn’t just knowing the figures. It goes beyond that. It involves knowing your expenses…all your financial obligations. One thing this would help you do is plan realistically. One reason many people are unable to stick to the plan is the fact that they have unrealistic expectations. To do this is to set yourself up for a crash.
- Put your plans to paper: There is a sense of clarity and purpose that comes with seeing your plans clearly written out. They come to life. They become more valid and more achievable. So writing down your budget; be it on paper or on a device, is always a step in the right direction.
- Plan before you earn. You don’t want to wait until your income arrives before planning. Chances are, the one-minute millionaire syndrome can kick in. This is the feeling of being rich until reality kicks in., which is often too late. As long as your income is certain and regular, make plans before it drops. This will keep you practical and prudent in your spending. Consider your budget as your financial voice of reason.
- Cut down on unnecessary luxuries. Granted, this may not be so easy in reality. The best first step will likely be to identify the small ways you use your money on unnecessary items—it adds up! For example, you may be able to improve your cash flow by packing your lunch for work, doing your own pedicure, having a movie night – from the comfort of your sofa, making your own coffee. Libraries are another great resource for free recreational and educational entertainment. You should try them.
- Cut yourself some slack. Understand that your budget is not the enemy. Rather than a restriction, it is actually a key to financial freedom. Just don’t forget to create a buffer – one that accommodates paying yourself first, emergency funds and an occasional treat. Yes, no harm in a brand new pair of shoes every once in a while. Life and indeed budgeting, are for the living.