HOW TO CREATE AND STICK TO A PERSONAL BUDGET

Personal or family budget is another important tool that helps you to form good money habits. Personal budget states your individual or family expected incomes and compares them against your expected expenses for a period, usually every month. Note that a budget is prepared in advance to give you control over your spending. I have written on setting financial goals before, and its my belief that you have already set some financial goals. The budget drives your financial goals and helps you to achieve them.

There is a very popular saying that "if you fail to plan, you plan to fail”. This saying lends huge support to personal finance budgeting. Your personal budget is your plan that shows you how you intend to make your money and how you will spend it. Therefore, one key importance of budget is that it helps you to plan your money well to be financially successful. A budget also brings efficiency into your spending habit: many people look at budget as restricting their spending and are afraid to use it. This should not be the case. The budget can help you to see financial problems ahead and make some smart decisions on how to deal with them; so, you would have prepared to deal with that financial situation before you get there. The budget helps you to take control of your incomes and expenses-it gives you control over your money. Many people make money but do not know how and where they spend the money. They keep working extremely hard to make money, but they have no savings, no investment in real estate/houses or company shares. Once their source of income is cut, they go broke immediately. You need a budget to give you discipline and help you make the best out of your money.

Making a budget is an amazingly simple task. I will guide you on how to make your first family or personal budget. If you are making a family budget, you need to involve your partner, i.e your spouse because both of you and grown up children need to agree for the budget to work. Convince your partner that your family needs to take control of their finances now. Whatever job or business you do, there is economic uncertainties in the World now, and you have got to start planning your finances now.

I have introduced you to one of the powerful rules of personal finance; that is the 50/30/20 rule. You can use this rule to build your budget. This rule will guide you to draw up your budget quickly. Do not think too much, just pick your pen and first write down all your expected income. For example, if your income is salary, which is N100,000 a month, then write it down. If you are a business person and sales you make is your income; write monthly sales of say N500,000 monthly down.

The second step is to break down this your expected income into 3 parts according to the 50/30/20 budget rule: 50% Necessities, 30% wants and 20% savings. Now let break down these 3 portions. Assign 50% of your income to these necessities that you absolutely need to survive as below.

·        Groceries,

·        Housing.

·        Basic utilities.

·        Transportation.

·        Mobile phone call credit and data

·        Minimum loan payments. Anything beyond the minimum goes into the savings and debt repayment category.

·        medicines

·        Childcare or other expenses you need so you can work

You can move money from wants and add to needs if your needs are more than 50% of your income assigned above.

Assign the next 30% of your income to wants. Wants help you to live comfortably. Wants include things such as:

·        Travel.

·        Charity and giving(this may be a necessity for some persons/families)

·        Entertainment.

·        Designer clothing.

·        Gym memberships.

·        Coffeehouse drinks.

·        Beer drinks

·        Electronics-TV, new mobile phones

Finally, commit 20% of your income to SAVINGS. SAVE 20% of your income to savings. Save towards your financial goals. Your financial goal could be to build your family house; to buy plot of land; to start a new business; to study for postgraduate degree; to sit for professional examinations; to relocate to a new country or city with better opportunities; and the list continue. Without savings these goals will not be achieved as there will be no resources to execute them. So, SAVE 20% of your income.

Personal budget can be done right on your mobile phone using budgeting mobile apps. Just go to playstore icon on your mobile phone and click on it to open to search space. In the search space, just type “monthly budget planner” and download and install it on your phone. You can add your income item lines as many as you need; you can also add expense item lines in addition to the default ones the app set for you. This app will help you build a budget quickly and start managing your money better. Do not seek to be details, just start with the information you have now. Put it in the app and follow through. You can set your budget monthly for the remaining days in May, and then set new one for June towards the end of May. Take control of your money. ACT NOW.

Stay Blessed. Stay Safe.