Some people love to budget and plan their finances down to the very last dime. Then there are the rest of us. We struggle. We create budgets that we don’t follow or we try to follow but at some point, we fall into the default which is to take things as they come. This is actually a big hindrance to many of us saving money or investing it because we can’t with certainty say where our money went or we have no concrete plan which will ensure that one day we have financial freedom. But since budgets are one of the best ways we can become better at managing our money then we must put in the work.
But where do we start on this journey? What are some of the things we can start doing as we try to get into the budgeting routine?
Start by creating a budget that reflects your actual spending habits.
This will help you identify areas where you may be overspending and help you come up with ways to reduce your costs.
Make a list of your fixed expenses, such as rent or mortgage payments, car payments, and insurance premiums. These are expenses that you can’t change, so you’ll need to plan your budget around them.
Look for ways to reduce your fixed expenses. For example, you might be able to negotiate a lower rent or mortgage payment or switch to a cheaper car insurance policy.
Make a list of your variable expenses, such as groceries, entertainment, and dining out. These are expenses that can vary from month to month, so you’ll need to be more flexible in your budgeting.
Set limits on your variable expenses. For example, you might decide to spend no more than 20,000 shillings a month on dining out, or 10,000 shillings a month on entertainment.
Look for ways to save money on your variable expenses. For example, you might be able to buy your groceries in bulk to get a discount or cook more meals at home instead of eating out.
Make a plan
A budget is only effective if you follow it. Decide in advance how much you will spend in each category, and stick to it.
Review your budget
Review your budget regularly to make sure you’re on track. This will help you identify any areas where you’re overspending and allow you to make adjustments as needed.
Don’t be afraid to make changes to your budget if you find that it’s not working for you. It’s okay to experiment and find what works best for your financial situation.
Keep track of your spending
Use a budgeting app or software to track your expenses and see how much you spend in each category. This will help you identify areas where you may be overspending. It will also help you stay on track. These can be especially helpful if you have a hard time keeping track of your expenses manually.
Automate your savings
Set up automatic transfers from your checking account to your savings account so you can save money without even thinking about it.
Pay yourself first
Prioritize saving and paying off debt by making these payments before you pay for anything else.
Use cash or debit cards
It can be easier to stick to your budget when you’re using cash or debit cards because you can only spend what you have. For some people, cash in specific envelopes also works for them. Do what works for you but make sure if you are using the envelope then your money is kept somewhere secure.
Your budget is a guideline, not a strict rule. It’s okay to make adjustments as needed, but try to avoid making major changes too often.. It’s okay to occasionally splurge on something you really want, as long as you’re able to stay within your overall budget.
Avoid impulse purchases
Impulse purchases can derail your budget quickly. Try to resist the urge to buy something on a whim, and take the time to think about whether you really need it.
Find ways to save
Look for ways to save money on your expenses, whether it’s by shopping around for the best prices or finding discounts and coupons.
It can be tough to stick to a budget, especially if you’re trying to cut back on your spending. Remember why you’re budgeting in the first place, and try to stay focused on your long-term goals.
Check out the following articles that may help you
Finances 101: How To Create A Budget And Different Budgeting Methods You Can Use
Finances: Budgeting For Variable Income (Freelancers, The Self Employed, Consultants etc)
Personal Finance: Tips To Help You Change Your Spending Habits
Financial Wellness: Understanding Your Finances Is The Key To Growing Your Wealth
9 Simple Ways You Can Stretch Your Money When You Are Facing Financial Challenges
Families And Finances: The Problem With Black Tax
How To Run A Large Household On A Budget