Your budget is a road map for where your money should go. It establishes spending limits for specific expenditures so you can use your money responsibly and not allow it to ‘talk in the rubbish.’ LOL. Now that you have an understanding of what it means, let’s see how to go around budgeting;
1. Determine why you want a budget: The reasons you’re budgeting may impact the choices you make during the process. Are you trying to save more, reduce overspending, get out of debt, stay on track towards a fixed goal or break the paycheck-to-paycheck cycle? Answer this ‘with your chest’ just before we proceed.
2. Confirm your current spending: Your budget isn’t realistic until you have an idea where your money has been going to. List your expenses on a spreadsheet: write down whatever purchases you make on a daily basis, use bank statements/debit alerts to track spendings too.
This will allow you to trace where your money is ‘going’ and also catch some irregular expenses in the mix like that needless wig you bought the day you were having cramps or needed to mend a heartache.
3. Add up your income: Since budgeting is about making the best of your income, add up your entire income be it wages or side hustle income and decide on the amount you wish to yourself monthly if you must attain your financial goals at the end.
4. Indicate your personal goals: This is the most interesting part for me. Start identifying your goals which may include; purchasing a car, building a house, owning your own property, saving towards a higher degree/MBA, or saving for retirement so that this baby girl’s life will not be ‘she used to be a babe.’ When these goals are established, then we can align your budget with them. ‘How e take be? Sister, E balance? The income and goals balance?
5. Decide how much you need to save: It can be hard to determine how much you need to save for big goals, like an MBA, a house, or retirement but we got you hooked nicely with our calculators here. Our calculator factors in prevailing rates as well as estimated inflation rates to help you decide how much you need to save.
6. Decide a type of budget: Here at HerVest, we recommend a 50/30/20 budget; after tax, 20% of income should go into your savings and investment, 30% for wants (your nice to haves) and 50% for your needs/must haves (rent, groceries, healthcare and debt payments) Note that 20% is the least savings recommendation. Depending on what your goals are this can be reviewed upwards.
7. Get an accountability partner: Now is a great time to put your friend, partner or that trusted cousin to use. Shop around your network for a great saver and share your budget and saving plans with them. Theirs is to keep track, remind and encourage you along the way.
8. Automate: Automation makes you accountable by default and that’s why we can’t stop emphasizing on automation Automate your savings on the HerVest App to keep smashing those goals easily. Whenever you have doubts or this savings journey gets slippery, remember why you started. Remember your goals.
Goals and income most likely may not match and that’s why we cannot overstate having multiple income sources. It is not an option, it is a necessity and start-up capital is never the challenge as you are quick to state. We have curated businesses you can start with Zero Naira to give you tips and guides on how to make your extra income.
Remember the 50/30/20 rule, 20% of income should go into your savings and investment, 30% for wants, 50% for your needs/must-haves. This way, you can be sure you are doing your budgeting right.
Dara from HerVest
