A budget is an estimate of income and expenditure for a set period of time. It is the total amount of money you earn and how you intend to spend and properly manage it.
Creating a budget is not a daunting task. Follow the steps below to get started.
1. Write down your income
The first place to start with is getting to know your total income. It is important to write this down as it would guide you in the following steps.
2. Use the 80-10-10 rule
Split your income using the 80-10-10 rule. 80% should be used for basic needs: food, transportation, utility fee, etc. 10% should be saved, and the other 10% could be used for charity, gift. After splitting it, in each category, state out the needs and allocate a specific amount to cater for each.
3.Track spending and record
Track your spending and record. This could be done on a Spreadsheet and reviewed weekly or monthly. This helps you know what is taking away your money and helps you to be more disciplined.
4. Come up with tactics to pay back debts
I wouldn’t even advise you to get into debts at all. However, in extreme situations, make sure to take debts that won’t weigh you down when you have to pay back and devise tactics to pay them back. You could allocate a part of your income for that sole purpose.
5. Be realistic
Be very realistic! You can’t earn #20,000 and create a budget of #25,000. Yes, as little as that additional #5,000 may seem, it may crumble the whole plan.
In all, ensure you are disciplined.
How do you budget your expenses? Are there any additional tips we should know? Feel free to share in the comments below.