Reduce Financial Stress with a Personal Budget
If you’re reading this article, you’re probably looking for a way to get control of your finances. The best way to do this is to formulate a monthly budget and committing to it. A sound budget is an essential tool for managing money, one that has allowed me to live well even on limited funds. One of the most important things that I do every month is outlining my monthly budget, and it has allowed me to systematically meet all expenditures, grow my savings, and eliminate debt.
I usually organise my budget for the upcoming month close to the end of the month. This will prepare me with my expenses in the coming month. It’s not a good idea to prepare a budget after getting paid because, too often, that flush feeling of receiving a paycheck results to nonessential and spontaneous spending before the paycheck ever reaches the bank.
Start your personal budget by outlining all the things that must be paid that month like rent, electricity bills, insurance policies, loan repayments and telephone bills. The general idea is to apportion a budget for the affairs that I must pay to keep a adequate roof over my head and continue earning money. I like to pad these necessities to produce “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 needed. An example are monthly savings deposits, credit card repayments and donations. Don’t get me wrong, some of these things are also necessary, but in case of emergency they can be excluded. By giving 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. Ultimately, these items get covered by what’s left in the budget. 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 handling my monthly budget has worked out very well over the long term as long as I honor it religiously.
