SIS, YOU’D BETTER START BUDGETING.
SIS, BUDGET THAT PAYCHECK.
At the moment, social media platforms are awash with numerous small business, from Facebook Market place to #smallbusinesstiktok. Buying and selling are at an all-time high. The best thing about this is that Women own most of these, which is genuinely an excellent time to exist. The #securing the bag is enormous. If you own a business or, like myself, is part and parcel of the 8–5 bandwagon, then I’m sure you earn a living. If this is the case, then you need to have started budgeting. Like ASAP!
Budgeting is the most common word in the financial world, and according to Oxford, the term means creating a plan to spend your money. As Dave Ramsey puts it, budgeting tells your money where it needs to go, not wondering where it went. When it comes to budgeting, I gravitate towards the 50,30,20 budgeting rule. 50% goes to needs, 30% goes to wants, and 20% goes to needs. This break down keeps me in check where overspending is concerned.
I budget my money and so should you and these are my reasons.
1. Budgeting Helps You Control Your Spending.
Do you remember the many times you did not have a budget? What happened? For yours truly, I managed to go way overboard when it came to spending vivaciously. Let’s be honest. When you operate your finances without a budget, you don’t have anything holding you back from spending beyond your means. Sure, you might have a general idea about how much money you can spend each month, but without complex, accurate numbers, it’s easy to lose control of your spending habits. It is paramount to have a budget, one that is accurate to the last detail as it will save you alot of coins in the long run. In other words, budgeting is crucial if you want to keep a close eye on your daily spending habits, understand the impact of seemingly minor expenses, and take control of your spending.
2. Budgeting Keeps You On Track with Your Financial Goals
Are you saving for that car or for that business? Then you need to have a budget. Along the same lines of controlling your spending, budgeting is important because it keeps you on track to achieving your financial goals. To achieve a goal, you need to stick to a plan and stay focused on a clearly defined process; and that’s where having a budget is so important.
In essence, when you create a budget, you are setting boundaries on your financial behaviour to stay on track and achieve every goal you select; you are essentially re-committing to your goals for your life. My advice is this, sit down and budget for that car, business or the trip to Europe and track it. The more often you commune with your goals and assess your progress, the more likely you will achieve them.
3. Budgeting Helps You Avoid Or Get Out Of Debt
Most of us are in debt for one reason or the other. It might be a student loan or the infamous mobile banking loan. Either way, you are in debt. If you take up budgeting, then one thing will happen, you will be able to pay off the loan faster—budgeting aids in debt repayment and management. For example, if you are working with 600 USD a month, it will be easier to automate a certain amount, let's say 150 USD, that will go into paying your debt; if you are part of a group that doesn’t have debt, then good for you. You can ensure that you don’t get into unnecessary debt by budgeting your cash right. Setting up cash for your emergency fund, paying your bills and living below your means will set you up for the right financial health.
4.It Helps You Prepare for Emergencies.
Life is filled with surprises, some better than others. When you get laid off, become sick or injured, go through a divorce, or have a family death, it can lead to some serious financial turmoil. Of course, it seems like these emergencies always arise at the worst possible time — when you’re already strapped for cash. This is exactly why your budget should include an emergency fund.
An emergency fund is a personal budget set aside as a financial safety net for future mishaps or unexpected expenses. It should consist of at least three to six months worth of living expenses. This extra money will ensure that you don’t spiral into the depths of debt after a life crisis. Of course, it will take time to save up three to six months’ worth of living expenses. It is imperative to slowly build an emergency fund and not dump all of one’s paycheck into it. Remember, it is for emergencies only!