All you need to know about personal budgeting

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In the world of business, it is very important for a company to work or operate on a budget. This is because a budget will help the company cut down on extra and/or unnecessary expenses. Corporate budgets are very important and are integral in running a company both effectively and efficiently.

WHAT IS A BUDGET?

According to investopedia,

a budget is an estimation of revenue and expenses over a specified period of time; it is compiled and re-evaluated on a periodic basis.

Budget is not only made for corporate organisations, it can be made for a person, a government, a country, a family, a group of people or anything at all that earns and spends money.
Since a background has been established and we all now have an idea of what a budget is, we can now talk about personal budgeting.

PERSONAL BUDGET

Everyone can benefit from having a personal budget to serve as a guide to spending. Spending according to a budget can help minimise impulse spending/buying which in turn help to save more for the rainy days ahead. For this reason, individuals and families should have and maintain a budget. Creating and using a budget is needed to keep a close eye on ones inflow and outflow of money from month to month.
Even though living by a budget is a wonderful way of managing ones finances, many people still think budgeting is not their thing. Below are some myths related to budgeting that we will be demystifying

• There's no need to budget

There is always a need to budget. Whether you earn so much or so little, budgeting can never be overemphasized. Having a leash on your monthly income and expenses allows you to make sure you sweat(hard-earned money) is being put to good use to serve the best purpose. For those who have fat earnings, budgeting can help maximise your savings and investments. While for those whose monthly expenses take up a greater percentage of their income, their budget should focus on helping to identify unnecessary expenses and cutting them down.

• I suck at Math

Tell me who doesn't suck at math. Okay, I know there are some math gurus out there but the truth of the matter is that you don't have to have a serious knowledge of mathematics before you can keep a budget, all thanks to budgetary softwares. All you have to be good at is following instructions. Luckily for us, many of the software programs are free and can be downloaded safely without fear of viruses(or bacteria...😀).

• I have a secure job

This right here is one of the greatest myths of all time. No one's job is truly safe. If you work for a multinational company, being laid off due to downsizing is always an option which the employers are not scared to choose or I'd you work for a small company that is still struggle to breathe, it could die with the death of it owner, be bought out or get lost in the identity of a bigger company through a merger or just fold out rightly. So to have a soft landing, you should have at least 3 month's worth of living expenses stashed up in the bank and it is a lot easier to save this money up if you have a knowledge of how much you are bringing in and spending each month.

• I don't have the discipline in me

if you still find it hard to embark on personal budgeting, set up a standing order in your current bank in which you have an account where all your cash goes into monthly. The standing order should be to transfer to a different bank account still in your name a specified sum of money every month. I will suggest you don't get a credit or debit card for this new account because having one might make it easy for you to spend from there.

• I don't want to deprive myself from fun

Budgeting is not the same thing as spending as little money as possible when you have more or making yourself feel guilty about everything you purchase. Budgeting just helps you save at least 10% of your income each month, or helps you to make sure you aren't spending more than you are earning. Even on a budget, you will still be able to buy that movie ticket or go to that fun park you love so much. Tracking your expenses and income doesn't change the amount of money you have available to spend, it just tells you where your money is going so that you can nip every unnecessaries at the bud.

WHY YOU NEED A PERSONAL BUDGET

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Maintaining a personal budget is an important ingredient to leading a purposeful and happy life. There are many reasons why keeping a personal budget is imperative.

The main reasons to maintain a personal budget

1.To help in an emergency

2.To help you determine where your money is really going and if it's going there for the right cause

3.It aids to pay off debts

4.It supports you to take a major decision like building or buying a house, buying a car, start a business or even furthering your education

5.It helps you to live a tension free life and of course

6.It helps you save more money for the future. This is really important.

STICKING TO A BUDGET

Okay, now you know and understand how important maintaining a budget is. You have accomplished setting up a budget for yourself and monitoring your income and expenses but the problem now is sticking to that budget. You just realised it is not as easy as you thought it would. You still use your credit card at impulse and you seem to have more old clothes and shoes and you just feel deprived. Then you just conclude that budgets aren't fun.

The good news is that you don't have to give it all up and throw everything out the window. Below are some tricks both mental and physical ones, to ensure that you stick to your budget.

1. Remember your goals: The whole point of keeping a budget is to stay away from overwhelming debt and strengthen yourself financially to be able to take on that big project. So anytime you feel like giving up, think about your plans for your future and remember that keeping to your budget will help you get there, and faster too.

2. Take away those options that makes it easy to cheat on your budget:
Availability is your worst enemy. Make it very difficult for yourself to engage in impulse buying; in other words set up barriers for yourself. An example is not going out with your credit/debit card.

3. Find and get some support:
There are times that you might want to give up thinking you are the only one on this budget maintaining journey. When you feel this way, do a little searching and find like-minded folks. It could be a forum online or monthly meeting. You need to know you're not alone in this. You can also have a level of accountability with your frugal friends, talking things over and talking each other out of temptation.

4. Try to reward yourself:
The act of budgeting will become tiresome if you are always looking at what you have to forgo and give up. To keep yourself going on and motivated, you should give yourself a mixture of long and short term gifts. Give yourself a reward when you have been faithful to your budget for at least a month. You should start building the mindset that sticking to your budget yields a pleasurable result.

5. Evaluate your budget periodically:
It is very important to keep a regular check on how you have created your budget. It is not easy to predict how much you will need to spend at every stage of your life. Take for example, having a new job may require you to have a wardrobe change and your current clothing budget might not make up for it. If it (your budget) is working, then you are at liberty to tweak it to your advantage. After all, it is your budget. Just make sure your long term goal is still at sight and you are good to go.

HOW TO BUDGET WHEN YOU ARE BROKE

I am tired from having so much to type so I will just be itemising and not explaining these tips:

1. Priotising your Bills

2. Review your spending either daily, weekly or monthly

3. After reviewing your spending, Try to cut out unnecessary expenses

4. Keep a journal on your budgeting journey

5. Don't rely on one income stream. Seek new and legit income avenues.

In conclusion

Budgeting is simply trying to balance your overall expenses with your overall income over a period of time. If they do not balance and your expenses are more than what you actually make, then there will be a problem for you.

Maintaining a personal budget is important because it helps you manage your monthly expenses, prepare for life's unpredictable emergencies and even prevents you from falling into overwhelming debt.Keeping track of your income and expenses doesn't have to be dreading, it doesn't require you to be a good mathematician and neither does it mean you can't buy what you want. It just means you will have greater control over how your money is disbursed and also make sure it is for the right purpose.

Maintain a personal budget today and sleep soundly at night.

Reference: investopedia