Good Morning our dear readers, Wish you’ll a productive & financial wise rest of the week.
Let continue from where we stopped last week, shall we…..
In the budget template we did last week we tried and arranged the expenses in a descending preference way, with what is considered as the most basic human needs taking 1st priority.
But if you actually look keenly the savings were deducted even before the bills started being settled, (we’ll talk about saving in the coming month stay tuned). If we are to be very sincere most of the time saving is taken as a last resort after all the bills have been settled and we have some extra cash, but it should actually be the first to settle, in the walk to financial freedom.
It is paramount to give priority to the expenses in order of importance in your own personal life (this could be different from our example template).
In our template we used the background of middle-class income earner that doesn’t own a home yet, hence we have rent as a most important expense, then there are utilities where you can categorize bills such as electricity, water, internet, and telephone bill, that category settles shelter on the human basic (shelter, food & clothing) needs category so next, we deal with food, hence the home shopping.
Next in the urban setting, there’s another expense that is actually a must if that revenue is to be generated, the means of transport, in this case, we assumed a car owner hence the insurance amount, that we also considered taking care of major maintenance cost, as for the incidental car expenses this will be catered for in the miscellaneous account.
Now food and shelter are of the table, let’s not talk about clothing for now, and assume that this is not a monthly must settle expense, for argument’s sake.
At this juncture lets remind you that we broke down the expenses on a monthly basis to allow us to plan properly, not because each and every expense is paid on a monthly basis, some may be annual or quarterly settlement, in such a case put the money aside on a monthly basis, that way when it is time to make the lump sum payment that month’s income will not carry a wholesome burden. This ensures that each month has the same amount of demand (expenditure) and supply (revenue). This however requires a certain level of discipline on a personal level (we’ll discuss how to achieve this in next week’s issue).
That’s a sum total of all the very basic expenses for most urban residents, (customize yours according to your basic expenses), now consider any debt owed to anyone could be a loan either to a financial institution, fuliza, business partner, life partner, any debt owed, always make it a priority to settle it according to terms of the agreement, this will earn you a better reputation and you can always bank on their bailout should you need any in future if have none no problem that good, try to keep it that way (we’ll discuss debts after the savings topic & see what are the good debts).
Remember we started last week by saying a budget doesn’t mean you don’t enjoy your money…… Well now its time to have an allocation for your monthly entertainment, could be for daily coffee dates, weekend catch up with pals, massage, anything to help you unwind and rejuvenate and ready to kickass the coming month. It is important to say, with this account one should be very careful not to overspend, we tend to that subconsciously. Here’s an idea of what you can do to ensure you stick to the budgeted amount, plan at the beginning of the month what it is that you will do on the coming month for entertainment, estimate on how much it will cost then budget for that amount, you can rotate the entertainment activities, depending with your personal preferences, (having the discipline to stick to the budget amount will be tough at first but it’s doable).
We are believers in the December holiday mood, we believe it is a time of the year when almost everyone is in a happy spending mood. Well don’t be left behind, have as much fun as you need, gift as many people as you want, travel in as many places as you want to, do all this without worrying that come January stress awaits you, do all this without taking a loan. All this is achievable in a very simple way start putting money aside as early as 1st January in readiness of December fun fare.
The good holy book (Bible) says the hand that gives is more blessed than the hand that receives. It is on this basis that our next allocation comes from. Every month purpose to do a good deed for someone in need, this will not have any immediate benefit for you but it is a debit in the heavenly account that you can always count on because He who sees in secrets does grand blessing in the open for everyone to witness and His name be glorified.
In the event that you end up with a surplus in the budget, make it a habit to re-invest it, sort out the clothing account that we omitted up there or if it was a rough month you can give yourself a treat, you deserve it, after all, you worked hard to earn the money, planned it so well and stuck to the budget.
Go try this, then tell us how it is, if already doing it comment and also let us know how it is, share your experience we’ll learn a thing or two. Let’s meet next week as we wrap up this month’s discussion, where we will address all the questions that you will have for us relating this month’s topic.
Mbugua & Associates.
WM.