Do you find yourself taking more ‘groceries’ towards the approach of every payday (even when it is on a fixed day of the month)? Do you often feel guilty when you have the urge to get something nice for yourself?
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There’s good news and there’s the best news. The good news is that a lot of people can relate to this so much that it has become a monthly visitor in the life of steady income earners; therefore, you will never be alone. The best news is that it is needless suffering. You can splurge on yourself all month round and not deal with the anxiety of spending your hard-earned money.
Budgeting is simply the act of tracking your expenses within your payday cycle. It is a prerequisite to financial stability. Anyone can become rich but show me someone who stays rich by chance.
Budgeting is a habit many Nigerians are forced to practice once they leave these shores. In the first few months of relocation, they struggle with maintaining this new habit instead of dealing with more pressing challenges like adapting to their new life and environment.
It is pretty surprising that budgeting is practised in developed and stable countries while in our motherland which is a sharp contrast; we entirely rely on the grace of our Maker. This is not to say that grace is impotent, but we do not have to go on a compulsory fast every month end.
While this might have convinced you to give budgeting a try for the first time or for the twentieth time, please note that many before you have embarked on this journey and stopped along the way as they could not sustain it. This is because the meal that is budgeting has only one ingredient: Discipline.
Discipline is required in two dimensions when it comes to budgeting:
The Discipline to Track/Document Every Expense
The term ‘tracking’ in the definition above is an action word, which can be likened to an infant, it does not take care of itself, you need to do the tracking immediately after every transaction. This is where many fall off; they try for a few days and lose steam because they failed to document some expenses in real-time.
The Discipline to Spend Within the Set Budget for Every Expense
It is not enough to document all transactions. The resolution to spend within the set budget is the essence of budgeting in the first place.
This might seem like a daunting task already, but it is nothing compared to the mental stress that comes with financial anxiety and the growing unlikelihood of attaining financial stability in the future. Furthermore, the beauty of budgeting is its exclusivity; it can be customised to fit its owner’s expenses and lifestyle. Without further ado, let us get into how budgeting works.
How To Start Budgeting
1. Choose Your Budgeting Tool
This is the first step in budgeting. It has the singular power to make or mar one’s commitment. Hence, it is pertinent to use a tool that is simple and easily accessible. Some individuals use Excel as their budgeting tool. Excel is a great tool, but one can argue that it is not very easy to use on a mobile phone, which is the most accessible device at every point in time. Paper as a tool left the group chat in the early 2000s for obvious reasons. The best bet is a mobile app for budgeting, you can whip it out at the point of making expenses, just input your expenditure and that’s it. Also, there are many options to choose from on Google/App Store.
2. Outline Your Monthly Income
While this is straightforward for some as they only have one, there are people who have multiple streams of monthly income, including steady cash gifts. All forms of income should be outlined. If the income is earned quarterly, bimonthly or annually, it can be divided to yield the monthly amount.
3. Outline Your Monthly Expenses
We can agree that this list has the potential to be endless, but every recurring expense falls under a category. Group all expenses and fix a budget based on the estimate from months past, to be adjusted as you continue your budgeting journey.
4. Commence Tracking
This is the final and continuous step in budgeting. All expenses should be inputted on the budget app under the suitable category. In cases where a particular category is about to be exceeded before payday, it enables you to balance things out by spending less or not spending at all for the month in other categories. The benefit of this overtime is the leftovers from your monthly income that can be added to your savings.
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