Personal Budgeting Tips For 2019

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Personal budgeting can be extremely overwhelming, so overwhelming that only negligible few Nigerian families have a working monthly budget.
But the question remains, “Is having personal budget worthwhile?” The answer is “Yes.” Developing a budget that can be maintained over a long period has been definitively linked to building wealth, while simultaneously helping the budget planner to get out of debts and cut expenses.
Most people seems not to bother about implementing personal budget plan for themselves. The mistake many of them make is that they so much rely on the fact that they knew approximately how much money they make annually, and against the backdrop had never broken down their expenses by category to figure out what they could afford on a recurring basis, or how much money they could regularly invest.
In short, they want to spend money on the things they needed and wanted without determining first whether they could truly afford them.
However, some appeared to have realized that after overdrawing their accounts, and had on that note become indebted to friends, colleagues and their offices, that there is need to draw a budget plan. But how can a first timer decide to get real and begin a budget?
If you are a first-time budgeter, here are 12 steps to make the process as smooth and painless as possible.
Decide To Start a Budget
If you are reading this article, chances are that you have already made the decision to begin a working budget. Congratulations! For many people, this is the hardest part. Read on to get started with next steps.
Know How Much You Have
If you have a well serviced savings account, investment accounts, or any other financial instruments, you will want to know how much money is in each account as well as the interest rates and expenses of each one. Make note of this information as it would become important in determining your net worth and the best use of your capital in the future.
Know How Much You Make
For some people, this is easier than others. Those on a salaried pay scale can easily find their monthly income. For hourly employees or those who work in a business where income may rise and fall unpredictably, this can be much more difficult.
The most important consideration, regardless of how you earn your monthly income, is to determine the average monthly amount of income that you receive. A good way to do this, if you receive irregular income, is to average out the last 6 to 12 months of recurring income and use the figure. If you want to be extra conservative, you can choose the lowest monthly amount you have earned in the last year, which will hopefully provide you with a worst case scenario.
Know What You Owe
Determining your monthly recurring debt payments should be your next step. This should be fairly simple to do, as long as you have stopped incurring additional debts in the short term. If you haven’t been able to break your dependence on credit cards, that’s okay, as building a budget will act as a first step for your next financial priority which should be getting out of high interest consumer debt.
To find out what your monthly recurring debt payments are, calculate the total amount owed on each debt account as well as the minimum monthly payment.
This includes car loans, mortgages, credit card debt, student loans, and all other debts that your family pays on a monthly basis. This will provide you with the first few line items in your budget, and will allow you to determine your net worth.
Determine Your Net Worth
Once you know how much money you have and how much you owe, you can easily determine your net worth. Just subtract what you owe from what you have, and you will derive a number. This number will tell you the value of your financial resources.
Determine Your Average Recurring Monthly Expenses
This can be the hard part for many people. The best way to determine your monthly expenses is to make a stack of household expenses for a month. Keep your receipts, your utility bills, and any other expense that arises during a one month period, and divide these bills into categories.
The categories can be as general or as specific as you want them to be. You may decide to keep the categories extremely general (automotive/household), whereas you may prefer specific itemized categories such as (car wash/electric bill). Either way works well as long as you determine an average amount of expenses for each category.
Enter This Information into a Database
It used to be, if you had a budget, you had an old school paper ledger. Things have changed for the better for all of us new budgeters. Software programs like Microsoft Excel and online budgeting tools like Mint, You Need a Budget, and Envelopes have made it much easier to take the results of your first few steps, and develop a highly adjustable and sustainable long term budget. You can use Microsoft Excel for your own personal budget, because it allows a greater deal of flexibility than sites like Mint.
However, many people resort to online budgeting sites, and whichever path you choose will ultimately help you build greater wealth and greatly help keep you out of financial trouble.
Look At the Bottom Line
After entering all of the above information, you will discover the most important number in your budgeting process which is the bottom line.
This number will tell you whether you are overspending or under spending. Ideally, during this step you will find that you are living within your means, and maybe will even have a little left over on a monthly basis. On the flip side, you may determine you must make adjustments to your monthly expenses in order to live within your means.
Make Adjustments Accordingly
If the bottom line of your budget proved that you are overspending your monthly income, you will come to the most difficult step that is, making cuts to your monthly expenses. There are available resources, particularly online, that will teach you to be smarter with the income you have, help you cut your recurring monthly expenses, and establish your financial boundaries for personal budget planning.
Adjust Categories Based On Reality
Life is full of surprises. Food, transportation fare, and rent gets more expensive, and other services subscribed to can get hiked when you least expect it. Each time you notice inflation creeping up on your expense categories, get a raise at work and begin to earn more money. You must adjust your categorical expenses based on the realities of the world around you.
Pay Yourself First
Depending where you are in your budget, based on your bottom line, you may want to add a few extra line items to your monthly expenses.
Moving money into savings and treating it like a recurring expense will allow you to slowly build up your savings without feeling like you must make these deposits from what is left at the end of the month.
Track, Monitor, and Be Disciplined
Keeping track of your budget takes an hour or so a week. But this will save you a lot of time in the long run. Once you have an established budget, you will want to keep it in check.
The discipline and associated knowledge that you are making good long term and short term financial choices will provide you with a great deal of comfort, and will take you from living pay check to pay check, to being able to see the long term results of your disciplined savings and financial planning.
Final Word
If you don’t have a budget, this is the time to create one. By following the above 12 easy steps, you’ll be on your way to financial freedom and building wealth for the future. Happy New Year!

Africh Royale

Africh Royale

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