Budgeting refers to creating a spending plan for your money which will help you determine in advance whether or not you’ll be able to have enough money to do the things you want to satisfy your needs. A budget can also be defined as a list of projected income & planned expenses.
“The 80/20 rule.”(Read more about the Pareto principle in maths).
This can be applied in budgeting to suggest that no matter your level of income you should save/invest at least 20%.
A key pointer to effectively do this is to “Save before you spend”.
This can be applied in budgeting to suggest that no matter your level of income you should save/invest at least 20%.
A key pointer to effectively do this is to “Save before you spend”.
Put your 20% aside like it never was yours or you never came into contact with it in the first place.
The 80% can be split between your fixed and variable expenses. Thus you can allocate 50% and 30% respectively in line with your priorities.
The 80% can be split between your fixed and variable expenses. Thus you can allocate 50% and 30% respectively in line with your priorities.
FEW TIPS TO BUDGET EFFECTIVELY
1. Set a General Spending Cap.
That is find a formula that works for you. I can do say a 70:30 instead of an 80:20 & will commit to spend 70% of my income. You can do a 50:50, 90:10, 60:40 and the likes.
1. Set a General Spending Cap.
That is find a formula that works for you. I can do say a 70:30 instead of an 80:20 & will commit to spend 70% of my income. You can do a 50:50, 90:10, 60:40 and the likes.
Just assess your current situation and adjust accordingly.
No 100:0 please😂😂😂
No 100:0 please😂😂😂
2. Allocate to Specific Things
Eg. Food- 20ghs Daily * 5 working days= 100ghs
Transportation: Uber 50ghs daily/ Troski 10ghs
People- Mum’s birthday next month- Gift 200ghs
Occasions- Boys-Boys Hangout- 150ghs.
Eg. Food- 20ghs Daily * 5 working days= 100ghs
Transportation: Uber 50ghs daily/ Troski 10ghs
People- Mum’s birthday next month- Gift 200ghs
Occasions- Boys-Boys Hangout- 150ghs.
3. Set aside an Emergency Amount- this amount should be specific and do not abuse it.
WHAT TO AVOID WHEN BUDGETING
a. Setting an overly tight Budget-
If your budget is too restrictive, the likelihood of you defaulting is very high. Leave a bit of room to accommodate unexpected changes.
a. Setting an overly tight Budget-
If your budget is too restrictive, the likelihood of you defaulting is very high. Leave a bit of room to accommodate unexpected changes.
b. Forgetting the Little things-
For example people do not budget for Data or airtime whereas it consumes a lot of our income. Other things like Apple music and netflix subscriptions no matter how small the amount is should be factored in our decision making.
For example people do not budget for Data or airtime whereas it consumes a lot of our income. Other things like Apple music and netflix subscriptions no matter how small the amount is should be factored in our decision making.
c. Impulse Buying-
Most of us use Instagram, online, twitter shops which i must admit has some very enticing deals. Sometimes close your eyes or scroll through quickly. Buying on impulse is a sure way of defaulting from our budgets.
Most of us use Instagram, online, twitter shops which i must admit has some very enticing deals. Sometimes close your eyes or scroll through quickly. Buying on impulse is a sure way of defaulting from our budgets.
CONCLUSION.
-Budgeting is a must for financial independence.
-Remember to Save Before You Spend.
-Remember the 80:20 principle and find a formula that works for you!
Cheers to financial independence.
-Budgeting is a must for financial independence.
-Remember to Save Before You Spend.
-Remember the 80:20 principle and find a formula that works for you!
Cheers to financial independence.
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