Making a budget is a simple task. Anyone can do it. But following a budget, and sticking to it, can be much harder. The following guidelines will help you find the discipline you need for each aspect of your budget.
1. Setting financial goals
- Set specific short and long term goals for your money.
- Set up at least one goal that you can react quickly to reward yourself for saving.
- Review your financial goals and budgets over time.
- Think of what you want in life and set goals towards achieving that.
- After setting your financial goals, plan where you will get the money from. If you can’t get enough money from your income, raise additional money through home-based projects like vegetable growing and marketing, bricklaying, roasting and selling of groundnuts, baking, and others.
- Reduce what “goes out” as a key form of saving. Wise spending helps you save.
- Make a list of all the possible ways to spend less on daily expenses. You can save more over time by cutting back on regular day-to-day expenses than by cutting back on one big-ticket item.
- Plan to meet your basic needs before thinking of luxuries.
- Keep track of how much you spend on everything.
- Save first! Follow the 10 per cent solution—save 10 per cent of what you earn. One strategy is to save first and then think about how to spend what’s leftover.
- Save 3–6 months of operating expenses in an emergency fund before you allocate saving for other purposes. This will protect you in case of family illness or unemployment and reduce your reliance on short-term debt to meet emergency needs.
- Keep savings out of reach. If you keep your savings at home, you are likely to feel pressure from your family members to spend that money.
- Save and invest so that you will still have something to live on in case of a sudden loss of employment, accident or illness.
- Figure out your tolerance for risk. Remember other occasions in your life that involved taking risks. How did you handle those? How did they make you feel?
- Gambling is a reckless business investment. Gambling can take the form of betting on sports, games, playing cards and more sophisticated games like in casinos or online. Gambling has left many people financially strained with destroyed relationships and friendships and an unmanageable amount of debt.