Simple budgeting steps to follow

gboyinwa ajomale

November 21, 2017 11:46 AM

A budget does not have to be so serious, try making it fun. Do not set a budget to deprive yourself of basic things.

There are simple steps to take when budgeting.

But the first thing that comes to people's mind when they hear about budgeting is a long sheet with a list of different things and lots of calculation, which makes them hate the idea of budgeting.

It has to be a reasonable budget but you can make it simple and fun.

Here are simple budget steps to follow

1. Know how much income you make

You need to know how much income you make on a monthly basis to determine how you want your budget to look like each month.

Knowing how much you make each month, would give you a clear cut idea on how to create your budget.

2. Make it short

Your budget should not have so many categories. Having endless categories would just overload your budget. You also don't need to go into the little details.

There is a high probability you won't remember all you have budgeted for. So you need to keep short and precise.

Try out the 50/30/20 approach to budgeting.

50 percent should go to your needs, 30 percent should go into your wants and 20 percent should be for your savings. With the 50/30/20 approach to budgeting, you keep your budget simple.

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3. Your budget should be realistic

Create realistic budgets. If you spend a 100,000 naira monthly and you think you can cut it down to 40,000 naira monthly, then you might not be creating a realistic budget.

Instead of doing such drastic budget moves, you can try to cut down on your budget by 5 or 10 percent and see if you can live on such budget.

Then you can further adjust on it as the months go by and see

4. Separate your needs from want

To create a good and efficient budget, you have to realise your needs are more important than your wants.

When tracking your spending, you realise that some things you spend money on are not really necessary, they only just desire such things.

Separating needs from wants would make your budget more precise, leaving out space for unnecessary things which helps your finance.

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5. Adjust your budget and follow through each month

As you keep track of your income and spending, so also should evaluate your budget every month.

Check out your budget each month and look for grey areas where you can make reasonable adjustments.

Even if there are just little things you need to improve on, just make sure you find ways to adjust it. The little adjustments would have a positive effect on your finance in the long run.

You also need to follow through with your budget each month. You can't create a budget and you start giving excuses why you can't follow it and then fail to follow through.

It is very important to follow through with your budget to improve your finance.

gboyinwa ajomale