5 Best Tips On How To Budget Effectively

How To Budget Effectively

By Angel Yaki

A budget is an estimation of your revenue and expenses over a specified future time. It is usually compiled and re-evaluated periodically. Having a budget is crucial. Budgets provide a defined explanation of how you intend to allocate your money. It prevents overspending and wastage of your funds. When creating a budget, you should consider the following factors

1. Decide On A Budget Period Is it for a month, semester, or calendar year? A monthly budget works best but that also depends on how frequently your income comes in. If your income varies monthly, it would also be good to factor in this and other changes.

2. Choose A Budgeting Tool: A number of tools can track your income and expenses on a budget. Most times people prefer using the good old pen and paper method. However, an excel document, spending tracker, standing order, or a budgeting app helps to keep track of your spending.

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3. Review Your Monthly Income: Estimate how much income that comes in from your job, family, side gigs, and other sources of income you have. Is this frequency standard? Do you have income that comes in once a year or during your academic breaks? Review and ensure they are accounted for in your budget. Next, understand where your money is going, books, rent, food, transportation, etc.

4. Save 10-30% of Your Income: Budgeting is great and you should definitely have a budget that reflects your spending culture. However, not saving for an emergency, goals, or saving to invest in yourself is a big no-no. Save 10-30% according to your capability.

5. Create A Budget And Stick To It: You know your needs and essentials. Your budget should be a reflection of your personal money habits and standards. Making little changes according to your money flow and needs is great but remember to stick to your budget like a law. Many of us are guilty of overspending or even forgetting that we have a budget for that period. It really shouldn't be so. Stick to your budget like a snail to it's shell.
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