“A budget is telling your money where to go; instead of wondering where it went”- John C. Maxwell. He is a phenomenal leadership guru who could not have said it better, the budget never leaves you wondering what happened or you try to figure out what happened. However, this road map to financial well-being – budgeting tool is the answer to our financial problems and there is no way around it or no way to avoid it.
If you are serious about improving your financial well-being. Today, I will be showing you how to appreciate this wonderful tool and what it can do for you to achieve your own financial well-being. I am not so sure why people cringe at the thought of using this tool that helps one to manage money coming in and money leaving your bank account, it is mind-boggling?
“I cheated on my fears, broke up with my doubts, engaged with my Faith, and now I am marrying my Dreams – The quality of your thinking determines the quality of your Life” – Bernard Shaw.
It begs the question of who is controlling your financial destiny; it is YOU, and so if you recognize where you are going then you can attain it, budgeting is a helpful and effective tool that any person can use. It offers transparency and helps to manage and clarify your month-to-month expenses, financial savings, and debt to your advantage. It never lies, it tells you a story of how you managing your resource (money).
- Understand where all your (Dollars)Rands(other currencies as well) and cents go
- Help you save and invest for you & your cherished one’s financial future
- Getting out of excessive debt and construct monetary wealth and freedom for yourself and your future generations
Here is a kicker, we pay attention to the speech of the country’s finance delivered by means of our esteemed Financial Minister here in South Africa, each and every year, yet we seldom put into exercise and we criticize that it does no longer work or it does no longer go some distance sufficiently – it is exactly this lack of transparency & accountability that we avoid going through to deal with our own “skeletons in the closet”; if we don’t, then who will?
If we are waiting for our government officers to be held accountable, transparent, and supply services to a range of communities with diligence, should we not be the first to be held accountable to ourselves & loved ones and practice what we expect and preach? It makes you think, doesn’t it?
Firstly, take this quick litmus test to see if you are in control of your personal finances and managing your money well
|I know and understand my payslip|
|I know exactly what I earn|
|I know and understand the total amount of deductions on my payslip|
|I know how the UIF deduction is calculated|
|I know and understand how my employer has calculated and deducted the correct amount of tax, medical aid, pension, or provident fund|
|I know and understand other non-obligatory ad hoc deductions, such as but not limited to premium on policies, parking, canteen, union fees, garnishee order|
|I know exactly how much money my employer pays over into my bank account|
|I know and can track how much I spend each month|
|I keep a record of my monthly expenses each month|
|I know exactly how much money I owe each month(debt)|
|I do my budget and try to stick to it each month|
|0-3 YES; No control over your personal finances (Need help/intervention)|
|4-7 YES; You show understanding (Need improvement)|
|8-11 YES; You’re in full control (Keep it up & keep innovating)|
Normally, the budget has a terrible connotation in many people’s minds as it creates stress and low self-belief in coping with non-public finances; due to the fact if it does NOT work out, it increases tension and resulting in failure. We recommend you check out the Budget Workbook as a start that will allow any person to discover endless possibilities and opportunities, as a substitute for limiting one to what is available.
I would recommend you use it as it clearly shows you how it splits the expenses, financial savings, investments, and debt into various categories, We recommend that you use this breakdown below as it has strictly considered fairly balanced money management principles:
40% Fixed costs (household spent- eg. Food, Electricity, Clothes, School fees, Transport)
25% Financial offerings long term goals (eg. Retirement, Pension/Preservation Fund, Funeral cover, Medical cover, Unit trust, Mutual funds, Stocks, Real Estate )
25% Savings short term goals (eg. Emergency fund, Savings Account, Call Account)
10% Debt goals (eg. Car payment, Personal loans, Credit card, House Loan/Mortgage, overdraft facilities)
To help minimize expenses(outflows) into a few manageable classes that will allocate your income(inflows) easily:
When you work out how much you have (net income after tax) and then it breaks down and works out in the following way:
- How much do you currently spend (household),
- How much of it you keep (savings & investments)
- How a good deal you owe (debt) and
- How much you keep in the direction of financial services desires (unpredictable & unplanned conditions such as death, accident, medical expenses) just to mention a few.
When you work out how much you presently spend, then use the Budget Workbook tool to also include:
- Fixed expenses(pay each month & regularly – e.g. rent, car, house payments
- Variable expenses(pay every month however they change – e.g. groceries, electricity, transport)
- Irregular expenses(only take place each now & then – e.g. holiday, birthday, Unplanned medical expenses,
- Include ALL Debt in your planner
Once the budgeting exercise is completed, the balancing line will come to be really seen the place you are balancing the books is either positive(black) or negative(red). You’ll have to face the facts and be realistic about your spending patterns and put plans in place, either to increase(earn additional income) or cut down on spending or manage your debt so that you can balance the books returned to a nice healthy bottom line.
7 Budget_spending tips that will help you stay out of your financial woes
- Be sensible about your spending planner(be more straightforward and honest) about how much you earn, how do you decide to spend your income and where do you spend it, and with whom and be disciplined about your spending patterns and your money
- Needs vs Wants: Differentiate and prioritize between wishes and wants, so that you spend on necessary simple desires such as meals & water, roof, simple health care & hygiene & clothes on your back(comfortable & excellent dressing and not fancy famous manufacturer brand labels)
- Everything past this, a massive 4×4 or fancy SUV vehicle or triple storey house, manufacturer(brand) clothing names, fancy & steeply-priced meals & drinks is a “figment of our imagination” and let us be straightforward here, it is a want, due to the fact you can’t come up with the cash for it right away, let alone hold it. It states that you cannot afford it otherwise why do you charge it to your credit card or take out loan to pay for it?
- Impulsive or unplanned spending is driven by user needs or wishes or competition that only resides in our hearts (emotions) and no longer our heads (reasoning), these movements can have dire spending consequences(constraints) that should arise as you sacrifice your fundamental wishes for unnecessary wants, thus, it is necessary to make properly decisive steps to reach informed decisions.
- Review your spending patterns (ultimately balancing the books) as your needs and wishes grow or exchange or while going through a challenging or difficult time in your life(ebbs and flows we all do).
- Make it a routine to evaluate your spending patterns on the Budget workbook tool on a pretty ordinary groundwork and keep track to ensure that “the money went to the exact place you said/planned it must go” to avoid costly mistakes or surprises.
- Forgive yourself( do not panic), we are all human, you’ll probably not get it right to get your books to balance as you planned, the first time; consequently, do not keep a grudge towards your self for not assembling your financial desires and goals properly from the beginning.
However, please do not misunderstand and misquote me, it does not imply you should not or cannot enjoy Life, Life needs to be lived within reason, of course, treat yourself to Life’s indulgences and luxuries now and then, but do it all in a balanced way that you can AFFORD (frugal but not cheap – within reason). There is no need to compete with the Khumalo’s.
6 Benefits of managing your Budgeting_Spending patterns
- You can clearly see in black and white how a good deal or whether or you no longer spent extra or much less than you earn.
- Having a spending planner(budgeting workbook) in front of you, helps you to recognize almost at once and become aware of what, how, where, with whom you’re spending for and things you shouldn’t be doing.
- It helps you get a better and clear overview and grasp on how you are doing overtime in the long run, as you can extend your columns in your spreadsheet to cover a year.
- By often looking at your spending plan, you get an experience of relief and pleasure that all that needs to be taken care of, has been taken care of – yours and your cherished one’s future; so you can plan and live with confidence.
- It helps every person in particular household contributors( family & kids) to come to an equal level of grasp because anyone is allowed to take part and be involved in the method of reaching an informed decision.
- Creating a preference spending planner helps you get prepared financially and assists in being prepared for what is going to be required to make it happen or work
How to use the tool effectively?
Use the tool and see this as a new dawn, a second chance, an opportunity, to try again and see it as a treasured gift or lesson to be learned and have a great time while doing it. Surely, the milestones achieved consequently far outweigh the delay, the grudge, or a chore that you once felt and experienced.
As the famous saying goes” You can’t effectively manipulate (manage) what you can’t measure”, so to correctly control and manage your money (income) you want to be clear about what exactly is your household income. If you are a single Mom or Dad or Granny then it will be a single income after-tax & deductions.
If you have a partner(spouse) both your household income is a joint income (after taxes & deductions) of all the humans sharing in your family home and how many available resources (money) you have access to, for spending, saving, and investing, and debt.
When calculating family income, bear this in your thought to include all different sources of income; e.g. your partner’s income after tax & deductions, more If you are a single Mom if there is income for maintenance payments, baby grants, disability payments, monthly pension, as income profits of lodgers (Granny’s flat – spare rooms), sideline hustles or interest business(selling arts & crafts online, baking cookies and cakes) and selling at a soccer game or find business opportunities online, owning a taxi, spaza shop (run a tuck shop); tell it all and everything. Using your bank account; you can then calculate your family’s income above.
Understanding and calculating Total Household Income and undertaking the preference spending planner(budget) procedure is essential, especially if the household is thinking about their financial future, savings, shopping for a vehicle or a home, or enrolling teenagers through University or greater education or any other monetary decision.
You can use Budget Workbook for your family household expenses and debt repayments by categories over a duration of 12 months, doing it on a month-to-month basis, to see how far you have come.
In the end, it comes down to appreciation and knowing (comfortable feeling) how money is coming in (inflows) and how much is going out (outflows), and how much is saved and taking advantage of compounded interest over a period of time.
In the final analysis, it is now not how much you earn, it is how much of it you get to keep so that you can grow your wealth and ride the economic freedom wave, so it is possible with monetary astuteness and basic economic planning and discipline.
I am offering a first FREE 1-on-1 engagement to master the basic budgeting principles
During our one-on-one coaching session, we dive deeper and we painstakingly go through every line object with a pleasant teeth comb to understand the background, the intentions of your spending pattern, as it will help to clarify your concept, thought patterns as well as behavior. Book your call today by shooting me an email Royaltyarktribez@gmail.com
For more journals and workbooks, please check out https://payhip.com/RoyaltyArkDigitalGenesis
Thank you for taking the time to read this article. Please leave a comment below, with a query, or a question or share your story and we promise we will get back to you. Once again, thank you for gracing us with your presence.