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If you are reading this, you are most likely experiencing slight financial stress and searching for a way to gain control of your finances. Developing and committing to a monthly budget has always been one of the best methods to do this. A sound budget is an essential tool for managing money, one that has allowed me to survive even on limited funds. Organising my monthly budget is one of the most critical things I do every month, and it has allowed me to consistently meet all expenses, grow my savings, and reduce debt.
I usually map out my budget for the upcoming month close to the end of the month. This gives me a better view of my spending in the upcoming month. It’s not a good idea to prepare a budget after getting paid because, too often, that flush feeling of having a paycheck leads to unessential and impulsive spending before the paycheck ever reaches the bank.
I start my personal budget by outlining all the disbursements that must be paid on time like, mortgage repayments, utilities, insurance payments and auto loans. These are the things I must pay to keep a comfortable roof over my head and continue earning money. I like to pad these requirements to make “money back” after paying the bills and, if costs increase circumstantially, I’m always covered.
Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely needed. These items may include monthly savings deposits, credit card repayments, and donations to charity. These things are also needed, but in case of emergency I could put them off for a short time. By paying credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget does not include the cost of food, clothing, or entertainment. These items get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of handling my monthly budget has worked out very well over the long term as long as I observe it scrupulously.
