How to budget in these crazy economic times
Presently people are feeling more financially strained than usual based on the turbulent economic times that the world is experiencing. Regardless of whether you are well off or just scraping by, budgeting is an important aspect of your financial planning. It gives you an indication of how much money you have and what you are spending it on.
Regardless of the economic environment you should always make use of a financial budget to monitor your spending and determine how to best utilize your income.
Creating a budget might even uncover cash flow problems that you never realized you had.
As for the topic of budgeting in these turbulent times the answer is relatively simple. Prioritise your expenses. By prioritising your expenses you can separate the essential expenses (groceries, rent, bond repayments, water, electricity, fuel, etc.) from the non essential expenses (satellite TV, eating out, etc.).
Tips for budgeting:
- Use a spreadsheet or paper based layout to set up your budget.
- Keep your receipts to monitor how much you are spending.
- Review your budget on a monthly basis.
- Cut down on non essential expenses.
- Be realistic with the amounts that you allocate for your different areas of expenditure.
When you start the budgeting process it is important to remember to pay yourself. By “pay yourself” I don’t mean allocating money towards unnecessary expenses, paying yourself means saving. These savings can be allocated towards areas that will be beneficial to you in the future like investments, education, etc.
Generally speaking, your budgeting skills will improve over time. With your initial budget you might use unrealistic figures by under or overestimating certain aspects of your expenditure, but this will improve with experience.
Budgeting is the first step required in order to take control of your financial freedom. By controlling your expenditure you will place yourself in a position to make informed decisions regarding your finances and in doing so you could possibly relieve some of the financial strain you may be experiencing.
Source: Raul Jorge, PSG Konsult Tyger Waterfront