Are you a spend thrift? Do you have problems when it comes to budgeting?
Budgeting is one sure way of ensuring you spend your money wisely. It is also a very good way to help you stick to your financial plans.
Here are tips to help you budget
1. Set a Budget, Period
Most people assume a budget should be monthly. However, it all depends on ones spending habits.
You need to figure out what your budget period is, by this I mean is your budget monthly, weekly etc.
This will help you decide how much you are budgeting for because your spending in a month is different from your spending in a week.
2. Track your spending
This is pretty straight forward. If you want to have a good budget you have to start by tracking your money.
Find out how you are spending and where your money goes, this will help you make informed decisions when it comes to making your budget.
This can be done using mobile applications or just writing down every time you spend money, how much and how you spend.
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3. Use About 30% of Your salary for lifestyle allowance
This might seem odd, but budgeting does not mean not using your money to have fun.
In fact it is advisable that you put down an amount every month to spend on things like, movies, eating out, travelling etc.
This is a good way to spend and still stay within your budget at the same time.
So for example if you earn 25,000 shillings your lifestyle allowance should be around 7,500 shillings.
4. Set aside at least 20% of your salary for financial priorities
It is important that one saves. Putting aside money is always a good idea as it helps secure your financial future.
You are supposed to set aside a certain amount of money say 20% of your salary, for emergencies, retirement fund or loan repayment. Whatever you view as a financial priority.
For example, for someone earning 30000 shillings, they should always set aside around 6000 shillings per month as a priorities fund.
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5. Use Cash
Now with the new era no one wants to carry money around anymore. Everyone is using cards or mobile money transfer to pay for goods.
As much as this has brought convenience to people there is also a down side.
When you do not give cash it is very difficult to notice how much you are spending and also, with cash there is a limit to how much you can carry whereas with cards and phones there is no limit.
This means you might end up spending more if you are not careful.
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With a good budget, you will be able to achieve financial success much faster as opposed to blind spending.
By Michelle Wanjiku