5 Budgeting Tips to Help You Manage Your Finances

Making money is what many aspire to have, they want financial statements that read in the millions yearly, but there are people who live that life, and still have very little to show for it at the end of the day.

Careless spending is usually responsible for this most times, but there are times where the issue is not with how you spend your money, but with how you do not spend your money.



How many of you when you get your paycheck, move from your paycheck to spending on needs that arise and before you know it you are left with nothing in your hand? I can assure you, you are not alone. A vast majority of people cannot clearly account for their salaries by the middle of the month, and if you are lucky to be paid per project, it doesn't get easier. Many people who work per project often have to live from paycheck to paycheck. Does a fatter salary solve the problem? Of course not. An increase in salary does not equal an increase in financial intelligence, but good budgeting habits is a huge leap in the right direction.


Today we will look at what a budget is, why you need a budget, and 5 tips to help you budget better.


What is a budget?



Investopedia defines a budget as "A budget is an estimation of revenue and expenses over a specified future period of time and is utilized by governments, businesses, and individuals." If this confuses you a bit, I'll simplify it for you. A budget simply is planning your finances ahead of your salary. Meaning you don't have to wait till you have your money in hand before you know what you intend to do with it. 

Like I mentioned earlier, many people go about their daily lives without a proper budget, and it reflects heavily on their finances.


Why do you need a budget?

Needless to say, having a budget is like salvation for a man who cannot track his finances. It is a great gift. Here are 3 reasons why a budget is essential for you.


A budget helps you track what you spend on. 

Creating a budget helps you analyze what you normally spend on and what you don't. It gives you insight into those unnecessary little billings that you do not know pile up and eat a chunk of your money. 


A budget helps you save money.

When you are able to outline what you need and do not need, you are better able to save money. A good budget would keep savings as a priority and not an afterthought.


A budget keeps your finances organized.

Have you ever had to answer the question, 'what did you spend your money on this month?' and then you were left speechless? Well with a budget you will be able to keep track of what you spend your money on, and you'll be able to account for your finances in total.


What else does a budget share with salvation? It comes free of charge.


5 tips to help you budget efficiently.

 Budgeting might not be as easy as writing figures down, you would need a lot of resilience to stick to your budget. These are a few tips to get you well on your way into better financial habits.


1. Observe yourself within a given period.

How do you know what you spend your money on? How do you know the average amount you make per period of time? Simple, observation! Before you dive into any form of budgeting, you should learn to observe what you spend money on both occasionally and daily. You can better plan a budget with this little extra information.


2. Create Different Budgeting Styles 

Creating a budget can be both a simple task, and one that requires a lot of planning. There are various ways and styles of budgeting, and you might not find all of these styles suited for you. You should be able to try one, two or three styles or approaches, see how they each rub off on you, and decide for yourself, what works.

Some people work with a paper budget or entering details down in a book, others would rather use a digital option.


Keep in mind that each month might be different.

When creating a budget, have it at the back of your mind that the budget would vary per month. If you take the first tip seriously, you would easily observe the consistent part of your expenses and inflow of money. You can better create budgets that will account for the nuances of each month, or week. 


Create room for occasional spending

A budget should not be a death sentence, or an activity to squeeze out the fun in your life, rather it should help you create enough room to have more fun without risking your finances. When you create your budget, you should have a miscellaneous factor included, or better still apportion a part of your budget to cater for your wants. This way you can control how you enjoy yourself without breaking the bank. 


Create goals as you budget.

This might seem like an obvious thing to do, but many do not bother doing it. Yes you are budgeting, yes you are saving money, but do you have an end goal? With budgeting you can aim to create an investing plan after a certain period, or create a budget to help you pay up debt over a certain period, or just help to improve your savings habit, whichever side you are on, your budget should have a goal. You should also make sure that goal can be tracked. At the end of a period of sticking to a budget, you should be able to assess if your goals are being met.


Conclusion.

Budgeting is not a mysterious concept, and it not only for when you have money. Learning to create budgets helps you take better financial decisions as time goes on.

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