admin A few weeks ago, on my Instagram stories I asked about what kind of content you would like to see and many indicating budgeting. I am no budgeting expert, and am always seeking ways to improve my budgeting skills. It’s not easy but you have to keep on trying, because even small achievements can make a difference. Here are what I have learnt so far (some of which I implement) with regard how to start a budget:
1. Why start a budget?
As we grow older, we understand more the benefits of starting a budget. There are various reasons why you should start to budget such as saving more money and getting out of debt. Having a budget does not mean that you have to deprive yourself from things, but that you can have money for a rainy day peace of mind.
In the beginning it won’t be easy, but the more you practice the better you become. Always start small, and grow bigger as you get better.
2. How do you start a budget
Before starting a budget, you have to understand your spending habits and subsequently create a realistic budget. But how do you track your expenses?
- Enter your expenses into a spreadsheets or write them into the notebook;
- Enter your expenses using an app or;
- Use your bank statements to track down your spending habits.
You also need to know your irregular / one off spending, such as birthdays and holidays.
However, you also need to know what is your income, in order to make the best of it. So make sure you know your monthly net income, whether its from employment, side hustle, business income or income from investments.
3. Set a Goal
Whenever you set a goal, you feel motivated to work towards that goal. Whether it’s saving for retirement, saving for a holiday or just to buy something you have been eyeing, a goal will help stay on track and motivated.
An achievable goal, could be to have one month’s expenses in saving. Start saving that money until you reach that goal, once you see the results you would be even more motivated to achieve bigger goals.
Once you have a goal, you can now decide how much to save.
4. The Method
Online one can find various methods on how to budget. You can adopt the Dave Ramsey approach but whatever method you choose, it is important that you establish realistic goals, and that you have clear categories such as groceries, food, clothing and fuel.
5. Achieving your Goal
In order to achieve your set goals, you either have to increase your income or decrease your spending (if you can increase the income and decrease spending at the same time even better).
Have you ever tried looking for something in your home but did not find it and ended up buying another one? So you eventually end up with two of the same item. Therefore having an organised home, will also help you achieve goal, because you will avoid overspending on items you already have.
Increase your income by either having a side hustle or selling stuff that you don’t need at home. On the other hand you can decrease your spending by cancelling subscriptions which you are not really making any use of, cut down on luxury spending which can include eating out or expensive make up (anything that is not considered a basic necessity).
Your income should be divided into:
- Income that goes towards monthly expenses;
- Saving;
- Investment
I am sure that apart from loan repayments, your biggest expense would be grocery shopping. However, if you are careful you can even keep your grocery budget low. Read also my blog post about Grocery Budget
A simple system how to start a budget is the envelop system. All you need is some envelopes clearly indicating each category, whether its groceries, family expenses or personal. Place the money in each envelope and keep track on your spending. Start off with having a weekly budget and anything left can be brought forward to the following week.
DO NOT BORROW FROM ANOTHER ENVELOPE OR FROM THE FOLLOWING WEEK.
Hope this blog post helped you get an insight on what to consider and how to start a budget.
Ultimately it all boils down to how determined and organized are you. In my opinion, if you are organized in your home you can succeed.
Love,
Strugglingmum xxx
