PERSONAL BUDGETING AS A TOOL FOR A HAPPY LIFE.
Alex had a great well paying job. He was forced to resign from his job due to reasons that were not well disclosed from his workplace. He was immediately forced to go into debt to buy items before he could afford them. He ended up buying new items that had no value to his life. Most people find themselves in this state. They are either fired or very sick and they can’t do any productive activities.
Alex developed a negative attitude towards his life. He could not sleep or stay indoors throughout the day. Actual problems began to rise, desire for loans knocked on his door. Desperately he used the loan to meet his basic needs like food, rent, bills etc. bear in mind that this loan must be paid on time with the highest agreed interest. If he can’t pay it within a stipulated time, then his family is in trouble.
Alex had a family of six and having a family is another great responsibility. This reckoned so many countless things that had to be taken care of. They included food, medical, safety, security, kid’s school fees among others. He started making trouble to people around him borrowing some money from them. Life has challenges, so many challenges that when you don’t plan well you will face very unpleasant happenings. Life itself involves risks. Risks that some of them like an accident or operation can’t wait or give you time to save. Oh! What next?
Good life? Yes. Good life is more than making money. When it comes to happiness, non-financial assets for good marriage, family, friends, fulfilling work, religious convictions and enjoyable hobbies are far more important.
The highest percentage of success in life is all about setting goals, working hard to achieve them, figuring out what you are best at, saving for a specific purpose, and spending money wisely. This will help you have a more fulfilling life. Your destiny is your choice. A commitment to budgeting is a key to obtaining a healthy financial life and achieving your personal goals. Savings and better investment strategy will save your life and increase your financial stability.
At Tunapanda we pride ourselves on improving Financial Literacy in the society. We equip young people with the necessary knowledge and skills that will help you manage your cash and live within your means. At times you make payments on things that have little or no value to you or anyone else leading to frustrations, bitterness and financial insecurity.
Tunapanda identifies personal budgeting as the key to a happy life. Have you ever monitored your actual spending and made the needed budget adjustments? Money is important in our life and we must know how to manage it to avoid wastage like buying something in excessive quantities that we do not need. Have a plan on whatever you do. Make a budget.
A budget? Yes a budget. It is a financial plan which helps an individual to identify his sources of income and allocate them towards expenses, debt repayment and savings.
Most of us think of a budget mentally. No, no. It has to be on a paper. Putting your budget on a paper or in a basic spreadsheet is very very essential when you want a healthy future. Let it be detailed and accurate to help you reach your financial goals. Sticking to it can save thousands of dollars and avoid overspending.
A well made budget will help you to:
- Stop living paycheck to paycheck
- Keep your credit score healthy
- Have control over your money
- Save for an expected and unexpected expenses
- Identify early warning for potential financial problems
- Enable you to produce extra money.
HOW CAN YOU DO IT?
Very simple!
Step 1. Start now
Start immediately to increase chances of success. Don’t think that budgeting is only for people with great jobs, high salaries, business people or you plan to start later. Successful people started early when their incomes were relatively low and spent wisely.
Step 2. Set your goals
Try to recognize yourself and your personal life. Identify your goals and let them drive your actions. Incorporate your goals into your budget. Your goal should be S.M.A.R.T and should include short term goals, medium goals and long term goals.
a) Short term financial goals: Include goals that can be achieved within one year. They provide immediate gratification depending on your situation. At a given point they can be used to eliminate your high interest credit debt and increase your savings that will cover your unexpected expenses.
b) Mid term financial goals: They can be achieved between one year and five years.
c) Long term goals: They are achieved over five years. Saving for your retirement or paying your student loans is an example of long term goals.
Step 3. Identify your budgeting tool
Identify your best preferred method of presenting your budget: be it on a paper, a mobile application, a spreadsheet, a website etc.
Step 4. Identify all your sources of income
Try to know your sources of income both fixed and variable. Connect your bank accounts to your budget to know exactly the amount of money you are working with.
Step 5. Set your spending Categories
Start by listing your needs and wants. Reduce your wants to save more and invest more. Devise a plan within your budget on how you meet your needs and wants. Prioritize on your spending categories. Consider short term, mid term and long term financial goals.
Step 6. Put money into those spending categories
Remember every coin counts and must be given a job. I recommend a zero-based budgeting whereby saving and investments are specific items in your budget. The budget should be flexible that when your want to change you can do so anytime. Use the best strategy to overcome your overspending. Train yourself to use the money earned the previous month. That means the money that is at least thirty days old.
The structure of your budget
You budget should appear in the format below:
Lets use alphabetical letters as imagination figures to represent each items as shown below. Then,
Revenue:(All your sources of income)
Salaries (a)
Side hustling (b)
Total Income{ a + b} giving a total of y
Spending:( refer to all of your financial goals)
Basic items (needs) (c)
Wants (d)
Savings (e)
Other goals (f)
Total expenditure {c+d+e+f} giving a total of x
Deficit/Surplus (y minus x) giving a total of s
Budgeting report/statement.
Cash surplus/deficit from previous month (m)
Budgeted for this month (n)
Actual budget (p)
Over/Under amount for the month {n less p} giving total of (r)
Total amount over/under for the next month is {m plus r} giving a total( t)
Every month compare your budgeting report with the previous month’s report to make valuable adjustments on where you went wrong or you want to improve. This will help you have a clear focus on your goals and achieve them effectively.
Start now, don’t waste time. Make change in your life.
