In the last edition of our Newsletter (July Newsletter), some golden learning tips on saving and budgeting were provided.  As we all know, it is very difficult to save for a long time if you don’t have a clear budget. Budgeting tracks your income and expenses and gives a big room for saving and reaching your goals.

What is budgeting?

It is the process of creating a plan that will help you to manage your income and expenses over a specific period of time. It will help you allocate your money towards different goals ensuring you have enough essentials while saving for the future. A budget tells where your money went. When creating a budget there are three main components to consider;

1. Your income per month
2. Expenses
   1. Needs – things we must have in order to survive
   2. Wants – things we would have in order to enjoy
3. Surplus

Let’s look at the example of budgeting by using Maria’s family monthly budget. Maria and her husband Joel, set a goal to buy land and build a house in the future five years and develop Joel’s business. In order to reach that goal, Maria and her husband create a budget that lists the income, expenses and saving options.

See sample of a budget below

Take your time to pass through Maria and Joel’s  budget template and then try to make your own. You will notice the expenses change according to personal status and taste. It is very important to have your own budget.

When you start to plan a budget, there is a simple rule you can follow. It is called the 50/30/20 Rule. 50% is for Needs expenses, 30% is for Wants expenses and 20% is for Saving purposes. Percentage can change according to your goals.

Here are some Budgeting tips

•  Set Clear Goals, ask yourself a question, why am I budgeting?
• Track Your Income and Expenses by keeping a detailed record of all your income and expenses.
• Choose a Budgeting Method such as 50% needs, 30% wants, 20% savings or the envelope system.
• Prioritize Essential Expenses
• Review and Adjust Regularly:
• Use Budgeting Tools such as budgeting apps or spreadsheets

Note:  It is important to set aside an emergency fund because when a rainy day comes, you will weather that storm.