The Importance of Budgeting and How to Start.

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(Last Updated On: July 13, 2018)

If you wanted to improve your finances, a good way to start is to learn how to budget your money. Saving and Budgeting are completely different. Personally Saving is a pre-requisite to budgeting. You need to learn how to save before you can budget. You need to develop the habit of saving first and then move on to budgeting.

When I  started, I developed the habit of Saving money every day, before I buy anything I ask myself first, Is it a Need or a Want? By doing this I can control my wants and prioritize my needs and the needs of my family first. That means not splurging my money on things that will lose money. Why go out for a meal, if I can cook in the house. It’s cheaper and healthier. Why buy a new shirt if I still got something decent to wear. By developing the habit of saving I can control and suppress my wants and focus on what I actually need.

Then I moved on to budgeting, which involves writing down using a pen and paper every month all my money coming in, and money coming out. By doing this way I can see a clearer picture of my cash position and allocate my money based on priority, may it be for investment , emergency fund, business etc. I also developed my budgeting formula which is Income – Savings = Expenses. When I get paid from my Job, I pay myself first by deducting a portion of my pay straight to savings and live from what is left. A majority of people save money after all the expenses and wants are deducted which for the majority of people is zero savings.

For many people writing down a budget or using spreadsheet software, is hard work, based on personal experience, it will not be accurate if you just put all the numbers in your head. There is a saying ” a short pen is better than a good memory”.   write it down or you can use software like Microsoft Excel. You need to review and have a look at it from time to time, and putting it just in your head and relying on your memory will be impossible to remember it all.

If you wanted to know how to start saving and budgeting, you can watch the video below. Learn the 50-30-20 rule. Watch the video below and get started.

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