By Edmond Moeletsi
Introduction
If whenever you have purchased an item you later regret whether it was a good decision, know you are not alone, almost everyone does that until they start to budget and set a clear spending plan. You should not look at budget as a swear word, but rather a tool to help you achieve whatever you set with your money. Your spending needs to be aligned with your priorities [1]. A budget is something that gives you control of your money because you would direct where your money is going. A budget is not as rigid as people think, you can freely adjust your spending as long as everything falls within your monthly income. If you have overspent on essentials, you can reduce other categories to balance your equation.
Why is necessary to budget with your priorities in mind
According to Jesse Mecham[1], budgeting is creating a spending plan that is aligned to your priorities. Don’t stop budgeting because you feel your money is not enough to cover your expenses, rather do a budget that ensures you pay for items that matters most to you. It might be good to put an allocation for a vacation but if that competes with the payment of your school fees – which ranks higher in priorities, then you need to shelf it (vacation) until your income can accommodate it. You have to be aware that our income will never be enough for everything that we need or want.
A budget will do a magic to your financial situation by helping you to spread your income over your major priorities in life. Each of the budgetary items might not have an ideal allocation, but the mere fact that it got a share is important towards you achieving your objectives.
As said, with budgeting you are becoming intentional about your spending and you are no longer surprised when you can’t buy certain items during the month because it was through choice not by the way.
A budget can also help you to re-channel your income in the right direction if you are not happy with your past spending. You might have been spending too much money on clothes and need a part of that towards investing etc. What you need to do is to reduce the clothing budget + spending and allocate that portion to the investment budget.
Conclusion
When you do a proper budget, you don’t just indulge on a spending that is not planned unless if it is an emergency or it falls under miscellaneous. Since you have budgeted based on your priorities, anything outside of what is on the budget that comes your way is not accommodated at all because it is not important to you.
You need to budget if you want to take control of your finances. This is an ultimate habit towards building wealth and becoming financially literate.
Bibliography
[1]. Jese Mecham (2017). You need a budget – the proven system for breaking the paycheck-to-paycheck clycle, getting out of debt, and living the life you want. 207pp. Haper Collins Publishers, Ney York, USA.