Today I'm going to share with you the practical tips that put me on top of my money.
Making a budget is not as tough as most people think. A budget is simply an estimate of the income and expenses for a particular period of time. In our case, a month is good. And you don't need a fortune teller to help you forecast you expenses, there is the amazing "miscellaneous" to help.
So how did I become good at monitoring and managing my income and expenses? And how can I help you overcome the initial frustration?
To have a budget, you need a estimate of your income and your expenses. And it's much better if you have actual past records. And that was where I started from. I started taking down my expenses everyday. I didn't need any special trick to remember my income, the huge expectation that builds up before it finally comes makes it impossible for me to forget my last month's income. And if you have the habit of paying 10% of your income as tithe or donation, you won't have trouble with the income part of your budget plan.
After taking down my daily expenses for about 3 months, I had a good idea of my monthly expenses. Then I moved on to making a simple budget. One that is so simple I'm yet to break it. I took the average of my monthly expenses for the past 3 months, removed all bad expenses I want to get rid off (buying Orbit and DSTV subscription), then I multiply it by 1.30. That is the money I set aside for the month. The rest I funnel into investment accounts or a project. Warning: I already built an emergency fund that has my 4 months living expense in it; I use this for emergencies that pop up, large unplanned expenses. And that's the first investment you should make: Build a solid emergency fund. If you have a family, put between 6 to 12 months living expense in it.
Finally, I make it a habit. I have formed the habit of recording my daily expenses before I sleep, I make sure my emergency fund is robust enough, I avoid expenses I'll be ashamed to record, I move out all the money planned for investment the week I get my income (pay myself first), and then I try to grow my passive income sources.
And it's that simple. Nothing complex. And it works.