A Personal Budget: a Dependable Plan for Financial Freedom
If you are reading this, you are likely interested in looking for ways to manage your finances. Preparing and sticking to a monthly budget has always been one of the best ways to do this. A sound budget is an essential tool for managing money, one that has allowed me to survive even on limited funds. Organising my monthly budget is one of the most critical things I do every month, this has allowed me to systematically meet all expenditures, grow my savings, and reduce debt.
I normally organise my budget for the upcoming month on about the 20th of the current month. That gives me a heads up about what’s down the road. It’s not a good idea to develop a budget after getting paid because, too often, that flush feeling of having a paycheck results to nonessential and impulsive spending before the paycheck ever reaches the bank.
Start your personal budget by determining all the things that must be paid that month like rent, electricity bills, insurance policies, loan repayments and telephone bills. The overall idea is to allocate a budget for the affairs that I must pay to keep a comfortable roof over my head and continue earning money. I like to pad these essentials to create “money back” after paying the bills and, if costs increase circumstantially, I’m always covered.
Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely necessary. These items include monthly savings deposits, credit card repayments, and donations to charity. Don’t get me wrong, some of these things are also necessary, but in case of emergency they can be excepted. By paying credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget will not include the cost of food, clothing, or entertainment. These expenses get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of managing my monthly budget has worked out very well over the long term as long as I observe it religiously.
