Monthly Budgeting as a Long Term Strategy
If you are reading this, you are most likely going through slight financial stress and looking for a way to gain control of your finances. The best way to do this is to formulate a monthly budget and committing to it. A sound budget is an essential tool for managing money, one that has allowed me to live well even on limited funds. One of the most critical things that I do every month is outlining my monthly budget, this has allowed me to systematically meet all expenses, grow my savings, and eliminate debt.
I usually map out my budget for the upcoming month towards the end of the month. This provides me with a clearer view of my expenditure in the upcoming month. It’s not a good idea to produce a budget after getting paid because, too often, that flush feeling of getting a paycheck results to nonessential and spontaneous spending before the paycheck ever reaches the bank.
I start my personal budget by outlining all the expenses that must be paid on time like, mortgage repayments, utilities, insurance payments and car loans. These are the things I must pay to keep a comfortable roof over my head and carry on earning money. I like to pad these necessities to produce “money back” after paying the bills and, if costs increase unexpectedly, I’m always covered.
Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely necessary. For example, donations, credit card repayments and monthly sving deposits. These things are also essential, but in instance of emergency I could put them off for a short time. By giving credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.
My budget does not include the cost of food, clothing, or entertainment. These things get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of managing my monthly budget has worked out very well over the long term as long as I honor it conscientiously.
