Reduce Financial Stress with a Personal Budget
If you are reading this, you are most likely experiencing slight financial stress and looking for a way to gain control of your finances. Formulating and sticking to a monthly budget has always been one of the best methods to do this. A sound budget is an essential tool for managing money, one that has allowed me to get on with my day to day life even on limited funds. Managing my monthly budget is one of the most critical things I do every month, this has allowed me to systematically meet all expenses, grow my savings, and reduce debt.
I usually organise my budget for the upcoming month towards the end of the month. This gives me a better view of my expenditure in the upcoming month. It’s not a good idea to produce a budget after getting paid because, too often, that flush feeling of having a paycheck results to unessential and spontaneous spending before the paycheck ever reaches the bank.
I start my personal budget by outlining all the expenses that must be paid on time like, loan repayments, utilities, insurance policy payments and car loans. The general idea is to apportion a budget for the things that I must pay to keep a adequate roof over my head and carry on earning money. I like to pad these requirements to make “money back” after paying the bills and, if costs increase out of the blue, 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. An example are monthly savings deposits, credit card repayments and donations. Don’t get me wrong, some of these things are also essential, 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 overseeing my monthly budget has worked out very well over the long term as long as I honor it scrupulously.
