Budgeting is one of my favourite icebreaker topics with clients to start conversations about savings and investing, and I love to relate how I got into the habit of budgeting.

My father worked in a public sector, and I hail from a middle-class home.Mom, as a stay-at-home mom, was tasked with managing funds, budgeting, and purchasing.It was always a tightrope to walk in the early years of their marriage, with salary being limited and expenses increasing year on year with a growing family and aged parents to care for.

What worked for my parents and proved to be a game changer in the long term was that they always made it a point to budget, regardless of their income.Every source of income and expenses were documented by my Mom in her little book of budgeting.

Budgeting does not have to be difficult; it is simply a method of tracking your money and ensuring that you are living within your means while working towards your financial objectives.Growing up and hearing my parents talk about budgeting, saving, and investing, I learned the following simple steps to get started with your budgeting exercise:

  • Know Your Income: Begin by calculating your monthly income from all sources. This includes your salary, freelance earnings, side hustle income, or any other funds you receive regularly.
  • List Your Expenses: Make a comprehensive list of all your monthly expenses. Categorise them into fixed expenses (e.g., rent, utilities) and variable expenses (e.g., groceries, entertainment). Don’t forget to include savings and investments as expenses, as they are essential for your financial well-being.
  • Set Financial Goals: Determine your short-term and long-term financial goals. Whether it’s paying off debt, saving for a dream vacation, or building an emergency fund, having clear goals will help you stay motivated and focused.
  • Create a Budget: Now, it’s time to put everything together. Subtract your total expenses from your income. The goal is to have more money left after expenses. If not, you may need to reassess your spending and find areas where you can cut back.
  • Track Your Spending: Budgeting doesn’t end with creating a plan. You need to monitor your spending regularly. Use budgeting apps or spreadsheets to track your expenses and see if you’re sticking to your budget.
  • Embrace the 50/30/20 Rule: A popular budgeting rule is to allocate 50% of your income to needs (e.g., housing, food), 30% to wants (e.g., dining out, entertainment), and 20% to savings and debt repayment. Adjust the percentages based on your goals and priorities.
  • Avoid Impulse Purchases: Impulse buying can derail even the most well-crafted budget. Before making a purchase, ask yourself if it aligns with your financial goals and if you genuinely need it
  • Build an Emergency Fund: Life is unpredictable, and having an emergency fund is crucial to handle unexpected expenses without dipping into your savings or going into debt.
  • Review and Adjust: Every month, review your budget to see how well you’ve followed it. Celebrate your successes and learn from any mistakes. If necessary, adjust your budget to reflect changes in your income or expenses.
  • Stay Committed: Budgeting is a continuous process that requires commitment. Stay patient and persistent. As you build good financial habits, you’ll find that budgeting becomes easier and more rewarding.

Remember, budgeting is a tool that empowers you to take control of your financial future. It’s not about restricting or depriving yourself but rather making intentional choices that align with your values and goals. The best part? Budgeting is for everyone, regardless of your income level or financial situation.

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