Have you ever spent so much time following your debit alerts, like retracing one’s steps in order to find a missing item, just to pinpoint the exact spot all the money saved has vanished to? This has become the recurring theme since the ‘cashless policy evangelism’ began. So once you step out of your house, the ‘debit or credit’ question becomes the norm. What we may find intriguing is, even after tracing the alerts(some of which come in later than expected), there is no huge loophole where the money went out from. Instead, it is the droplets that have formed the huge sum that has now taken a large portion from our savings. And then the vicious cycle continues; we earn, we spend(in bits), then we wait for the next payday. That cycle doesn’t have to remain that way. We are here to show you how to not just track those droplets but also plan for them so that at the end of a work month, we don’t end up searching and asking where all the money went, instead, we’ll be in full control of our finances.
If you’re looking to take charge of your money, these steps will show you how:
1. Categorize your spending honestly so you’d be able to know what consumes most of your income – Loving food isn’t a crime, just be honest enough to identify where most of your earnings go e.g Groceries, Utilities, Maintenance, Fun, Personal Development, Debts Repayment, Transportation, Feeding, Family expenses, Loans, Savings/Investment and others. This way you’re able to track the leaks in your finances.
2. Budget before and after you receive your salary:
This way you get to eliminate the things you thought were necessary and truly focus on what’s important. This is a way to merge theory with reality. The budget you created when all you had was the thought of the money tends to change when the money arrives(for the better or worse) it is best you plan for both.
2b. Build your budget around your financial goals. Based on your priorities, set your goals and build your budget around these goals. They could include and are not limited to school, rent, skill acquisition/growth, beauty, personal development, travel, professional exams, gadgets, and fun, etc. Know what your priorities are and build your budget around them. If you don’t know where to begin, you can adopt the 50-30-20 rule. The 50/30/20 budget strategy is a simple way to budget your earnings. You spend 50% of your pay on needs(necessities/can’t-do-without), 30% on wants(lifestyle choices/can-do-without), and 20% on savings and investments plans(short or long term). We’ve built a personal budget template. Grab yours here
Ps. Budget for fun just because you need to take time off to rest and unwind.
3. Create room for price changes in your budgeting – a little room to allow for excesses and fluctuations is important. The idea of an imbalance in your budget won’t be a welcomed one as it will nudge you to take out money apportioned to other things just to complete a necessity due to inflation, so make room for that change. You can mark up the prices for your essentials by 15% just so you’re prepared for what’s to come. If the prices of the items remain the same, apportion that fund to your emergency fund. We wrote about it here
4. Review your budget: A frequent check every now and then to tweak and ensure you’re following through with your plan is important. This not only helps you keep track of your money, it also feeds your mind’s eye with the goal you’ve set out to achieve. Keep your eyes on your money and review your budget regularly.
5. Automate your savings and investments so you do not miss out on your monthly contributions. Gone are the days when you have to squeeze your money into your box and begin the countdown for when you’ll break it. Once you’ve completed your financial audit and set goals you can then use Ziing to automate your savings; we have made provisions for this feature. We also have the best rates on Investments as well.
Here’s an extra tip: Be consistent!
”Don’t save what is left after spending, spend what is left after saving”. – Warren Buffet. Don’t forget, Budgeting helps you take charge of your money!