How to Budget Your Money | Budget Planning for My Money

Learn How To Create A Spending Plan And Budget Your Money Better.

In regard to how you should budget your money, Charles Dickens once said,

“Annual income twenty pounds + annual expenditure nineteen = happiness.

Annual income twenty pounds + annual expenditure twenty-one pounds = misery.”

Spending more than you make can be fun for a while, but in the end, Charles Dickens is right—it can be misery-making. There is nothing fun about paying interest on the money you have already spent. The good news is that life doesn’t have to be this way. If you have been spending more than you make, you can reverse the process and escape the misery. If you haven’t been overspending and you are simply trying to be proactive and make a plan to avoid misery, then you are steps ahead. We have loads of free resources created to help you develop your own spending plan: a budget.

What Is Budgeting and Why Is It Important?

Budgeting is the process of creating a plan to spend your money. Creating a spending plan/budget for your money is easy. It allows you to evaluate in advance if you will have enough money to do the things you need to do or would like to do.

If you don’t have enough money to do everything you would like to do, then you can use this planning process to prioritize your spending. It also allows you to focus your money on the things that are most important to you. Let’s talk about how to budget your money and why it is important. You can get a full article on what budgeting is here.

7 Steps to Help You Budget Your Money

• 1. Keep track of what you spend to get your finances in order.

If you don’t know what and where you spend each month, it’s likely that you are doing something wrong. And you could do better with how you spend your money.

Spending less is the first step to better money management. Use a money management app like MoneyTrack to keep track of how much you spend on non-essentials like eating out. Going to the movies, and even your daily coffee also add to this list. Once you know about these bad habits, you can make a plan to change them.

• 2. Make a monthly budget that is reasonable.

Set a budget you know you can stick to by looking at how much you spend each month and how much you bring home each month.

You can’t make a strict budget based on big changes, like deciding to never eat out again if you currently get takeout four times a week. Make a budget that fits your lifestyle and the way you spend money.

You should think of a budget as a way to get you to do better things, like cook at home more often, but you should also give yourself a chance to meet this budget. This method of managing money will only work if you do that.

• Save money, even if it takes a while.

Make an emergency fund that you can use when something unexpected comes up. Even if you only put a small amount into this fund, it can keep you from getting into dangerous situations where you have to borrow money at high-interest rates or can’t pay your bills on time.

You should also put money into a general savings account to protect your finances in case you lose your job. Use automatic contributions, to build up this fund and make it easier to save money.

• 4.Pay your bills every month on time.

Paying your bills on time is a simple way to be smart with your money, and it has great benefits: It helps you avoid late fees and spend money on what’s most important. Your credit score and interest rates can also go up if you have a strong history of making payments on time. You might think that credit scores are not important in Nigeria, but with the rise of the BVN and more and more digitization of the banking industry, credit scores are coming to Nigeria.

• 5. Cut back on charges that keep coming up.

Do you subscribe to services you never use? It’s easy to forget about streaming services and mobile apps that charge your bank account each month, even if you don’t use them often.

Check your spending for charges like these, and if you don’t need a certain subscription, think about cancelling it so you can keep more money each month.

• 6. Save money so you can buy big things.

Some kinds of loans and debt can help you buy big things, like a house or car, that you need right away. But cash is the safest and cheapest way to pay for other big purchases.

When you pay cash, you don’t have to worry about paying back a debt that could take months or even years to pay back. In the meantime, you can put the money you’ve saved into a bank account. Where it will earn interest that you can use to pay for your purchase. As a Nigerian, I would suggest a dollar-based account. Also, there are so many tech solutions nowadays to help you automate your savings. These also give you better interest rates than most banks are willing to give.

• 7.Make a plan for investing.

Even if you can’t invest a lot, you can still use the money you earn to make more money by putting a small amount into an investment account.

The first step toward better money management is to change your own habits. Some of these changes will be easier than others. But if you stick with this transformation, you’ll end up with great money management skills that will serve you for the rest of your life. In the meantime, you’ll have more money in your pocket.

A solid budget is the key to being good with your money. 

How To Deal With Problems And Challenges In Budgeting

What if my income just got slashed? What do I need to do?

If your income will go down, you need to take steps right away to help you get through this. If you don’t, you might end up in financial trouble. This is a list of things you might want to do to make the best of your situation. And, hopefully, this will make this hard time a little easier to deal with.

What if I make a very small amount of money or none at all? How can I remedy this?

If you don’t know if you’ll have enough money to pay the rent or buy food this month, you might be in one of the worst situations you can be in. Here are some important things to think about if you or someone you know is going through this.