We sure do. If a person earns a dollar or millions of dollars, having a budget is essential. There is this feeling for some people, that budgeting means depriving yourself of things.
To a certain extent this is true. However, a more positive view of budgeting is seeing it as a tool, that allows you to spend and save accurately as well as realistically.
How can you spend in a smart manner if you do not keep track of what comes in and what goes out? This is why it is important to have a budget. I like seeing my budget listed out to see how I am spending my hard earned cash.
Tip 1 – Prioritize Expenses as you put together a Budget
These are my priorities: tithes, rent, bills, food, recreation,travel, miscellaneous and savings. I budget from what is most important to what is least important to me. This visual representation with the relevant amounts for each, helps me to live a debt free lifestyle.
I further sub-divide the ‘food’ category into groceries, lunch (this includes a portion for buying things to make lunch and also setting aside money to buy lunch at least once a week). I use envelopes for the different portions of money – I have been doing this since 2001 when I started working. I learnt this from my daddy. I chuckle now to see it’s a thing in the debt free/finance community – I also do something similar for recreation. I have an envelope for planned events and one for anything that may arise. The miscellaneous category is my catch all. This means whatever unplanned events come up I can use this for that. If anything is left in each category then it’s rolled over to the following month.
There are some times when I may add other categories to my budget. For example, when I was saving up for a new computer, I put away the equivalent of a $100 each month for a year. I have that now for when this MacBook gives up the ghost. I have also done that when I was saving up for a new phone. They key is to start saving a year or more before big ticket items die. I have such peace of mind from knowing that when my phone and computer die, I can go out and replace them using cash. This is essential to fuel my debt free lifestyle.
Tip 2 – Budget to save for those rainy days
Life throws stuff at all of us. I believe it is important to build up some savings for different eventualities. Every little bit helps. Sometimes we have to delay immediate gratification to free up more money for savings. For example, if you by lunch every day and or even a cup of coffee that is quite a sum of money over a year. I sometimes buy a halfway decent salad, an onigiri and some nuts for lunch. That is around $8 or more. I buy ingredients for salad for $10 and get enough to have it everyday of the week. With this in mind, I plan my lunch menu, grocery shop accordingly and meal prep to stay on track. As we know, when we are busy or rushing in the morning, it is so much easier to just buy lunch and breakfast.
My life is about balance. My budget isn’t militant because I don’t want to feel like I am punishing myself. As a result of this, I set aside some money to buy lunch once of twice a week, which is a good compromise for me.
Tip 3 – Set some short term and long term goals as the object of your Budget
I like to give myself different challenges so budgeting is like a game. A short term goal for saving would be like saving up to go shopping in a few months. No, I no longer just shop on a whim. I have too much crap I bought on sale and wasted money. I have others like putting together a certain sum as a gift for someone or a project. Then there are long term goals like saving for retirement. We are never too young to save for this. There is quite a bit of satisfaction in setting some money goals and seeing your accomplishment bit by bit.
Tip 4 – Budget and live within your Means
Many of us have certain mindsets that cause us to throw away our money. Do we need to buy new clothes for every event, trip and so on? Do we need to say yes to every meet up, event and things of that nature? If your phone works, why upgrade it and have to pay money on a new phone for a few months? If your car is in good shape, why take out one on credit and go into debt? I am sounding preachy but I am baffled as to why people make these choices. Yes, we are all free to do whatever we want with our own money, I know. However, I am that friend who will ask others to think about these things and not just act on impulse.
There is much fun to be had and goals to be attained on a budget. If we give ourselves time to save up and be patient we can circumvent so much financial frustrations and headaches.
Tip 5 – Try Budgeting for 6 Months before writing it off
I challenge you to seriously try budgeting for 6 months. Go to YouTube and watch the myriad of content on budgeting. You can see everything from how to make one on paper or using different apps. It’s also incredible to see testimonies of people getting out of debt once they start budgeting and sticking to it.
All companies, countries and organizations have a budget that they operate within for a year. Clearly, this is an essential item. I hope everyone would find the joy in budgeting and do so to live a debt free life. It’s a beautiful thing.