Guess what? There are different ways you could budget your money. But first, allow me to introduce to you my concept Financial Leadership. Financial Leadership is giving your money PURPOSE and DIRECTION.
You give your money PURPOSE via goal setting and you give your money DIRECTION via budgeting. Budgeting might be difficult for some because some may not know what they are going to do with their money. They don’t have an idea of the direction they are heading in. So it would be helpful first to sit for a minute and think about what you would like to accomplish in terms of your goals. (If you would like to learn more about goal setting, send me an email at firstname.lastname@example.org or comment below and I would be more than delighted to set you up with a FREE webinar on this topic!)
When you finally have a clear idea of the direction you are heading, now you could create your budget.
Now, there are different ways you could do this:
1. Tracking your budgeted vs your actual spend: For those of you who may be novices, don’t panic! If you are new to this, you could jump start your budgeting process by simply tracking the money you spend within a month for an example. Keep running totals of the amounts you spend on gas, groceries and your other expenses, because you will be using these amounts to base your budget on. Create three columns below your income, Budgeted Amount, Actual Amount and Difference. The key to sticking to your budget is to keep track of each expense category. For example, if you allot $500 (the budgeted amount) for groceries and spend $200 (the actual amount) on groceries, how much money will you have left to spend? You guessed it, you have a difference remaining of $300.
Expense Budgeted Amount Actual Amount Difference
Groceries $500 $200 $300
2. Using envelopes to create your budget: The envelope system is a system used to place money into labelled envelopes for various spending purposes. Much like option 1, it is a hands on approach to managing your money. If you set aside $200 in an envelope for “Fun Money” per say and you run out, there’s no going into your “Utilities” envelope and removing resources to replenish your fun money.
3. Sticking to percentages in your budget: This option may be beneficial for those first receiving their salaries, as they would not have any responsibilities under their belt just yet. For those of you willing to give it a try, you could allocate 10 percent to giving (and if you are not a giver, that’s quite okay), 10 percent to saving, 10 percent to investing and live off the the remaining 70%. It may be challenging to save or invest a full 10 percent. You may not be able to give also. In some circumstances, debt maybe the inhibitor to fully embracing this option. If more than 35% of your income is tied up in debt, it maybe time to look at paying off your debts at a more rapid rate.
There you have it. Your budgeting options. Will they work? Absolutely. Will you get it right the first time? It takes practice. At the end of the day, the purpose of budgeting is to help you plan for every single cent in your possession.
Melinda Belle is the visionary and founder of Astrape (As-strap-pay)
Finance, the caring, knowledgeable, trustworthy, financial company guiding you to financial stability and prosperity through education, sound planning and advice. Melinda sees her role as that of an architect and is committed to the shaping of financial landscapes of businesses. She also crosses over to the personal side of finance, teaching families and individuals to manage their money and create wealth.
She is also the author of My Money & Me. A book which takes a closer look at how your behaviour affects the way you manage your money (www.astrapefinance.com)
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