SLC32-W2 || Real Life Problem Solving Challenge: Budget Planning
Budget is very important and it is the reason why it is defined as the plan of action that is set to be accomplished. This simply means it is what we have prepared for ourselves, our business, or our company to do. Budget is all about how money is spent wisely, and without a budget, we may end up spending money on irrelevant things.
How do you plan your weekly or monthly budget? Explain well.
Before planning my monthly budget I do ensure that I have calculated my total income for the month. Once I have calculated my total income the next thing that I usually do is divide my total income for the month into categories based on priorities or what I will need for the month. This is just exactly how I plan my budget monthly which has been helpful to me and below is how I follow up with my budget.
From the below image, you can see how I categorise my total income into percentage and the amount I budgeted the image shows how I spend ₦100,000 which is equivalent to 1,500 STEEM monthly.
In my budget food takes the largest amount because I like eating something nice and if I don't eat how would I have the energy to work is the reason why I often dedicate a huge amount of money to food.
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The simple budget method which you have seen is what I follow monthly in spending my money wisely and ensuring that I save from my monthly income.
What tool or method do you use to track your expenses? Show at least one tool or method in detail with a selfie.
A simple tracking notebook is what I use to track my expenses and sometimes I do use the spreadsheet on my phone to track my expenses. In my notebook and my spreadsheet, I do record what I spend my money on and the purpose of the spending.
My expenses tracking method
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On spreadsheet
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At the end of every week, I total all my expenses for the week and compare them with my budget to know if I have overspent money or not.
What are the unnecessary expenses that affect your income? Explain.
The unnecessary expenses that affect my income are;
- Unnecessary subscriptions of data and airtime
- Excessive eating out especially when I am not at home
- Frequent impulse purchases
- Frequently attending to friends' and family's needs when I am asked I hardly say no.
- Excessive spending on entertainment
- Purchasing items because of promotions without actually needing them.
The money that I am spending small! Small may look like nothing but at the end of the week or month when I have added it all together, I get to realize they consume a large portion of my monthly income which I have been trying my best to cut down on unnecessary expenses.
How do you save money from your income that will sustain you for future hardships?
My principle of saving money from my income that will sustain me for future hardships is the principle of **"Save first, and spend later". Getting money is hard, but spending money is very easy.
This is what I usually do. The moment that I receive my income, I do transfer a certain amount of the money into my savings account which I have two before spending on anything else. Even when I make a withdrawal from steemit and convert it to Naira I transfer a fixed percentage into my savings account.
These simple strategies of the mind include:
- Saving for raining day
- Saving for unforeseen circumstances
- Saving for an emergency fund
- Avoiding unnecessary debt
- 20% savings for future use
It is hard to save but the simple savings habits that have been shared with you have really helped me to prepare for emergencies such as unexpected family and friends' needs, health like medical bills, and a poor crypto market.
Have you ever created a budget that would improve your financial situation? Show us practically how.
Yes, I have ever had a budget that would improve my financial situation. There was a year when I was busy spending money without keeping records of my expenses and I ran out of money and realised my mistake.
My practical example:
After realising my mistake I increased my monthly savings from ₦5,000 to ₦30,000. This has so far significantly improved my financial stability and helped me to reduce unnecessary spending of my hard-earned money.
What advice would you give to others for great budget planning?
The advice that I would give to others for great budget planning is the following 👇
- Track every one of your expenses, no matter how small they're
- Create a realistic budget that is based on your actual income
- Prioritise your needs over wants
- Apply the principle of save before spending
- Set clear financial goals for yourself
- Avoid impulse purchasing
- Maintain an emergency fund
- Review your budget often
Budget is very important as it is the financial skills that help us to wisely manage our income and prepare us to overcome future challenges.
I am inviting: @dove11, @entity01, and @ruthjoe
Cc:- @ahsansharif
I learn from these nice piece of write up sir. But I have a question
Is it a right idea to save money seating idle in the bank without increments or investing what I intended to save?
0.00 SBD,
0.32 STEEM,
0.32 SP
Thanks for stopping by. It is good to have some savings in your account even you're not receiving interest should in case something happens and you don't want to touch your investment your savings can help.
Ok sir thanks I understand better now
Hi friend,
You really track your income and expenses. It really helps to spend money within your budget that you make. It keeps eye on expenses that we can control and save money for rainy day. You should add health expenses to your budget too if it not spend you save it for uncertainty. You are doing good budgeting.
0.00 SBD,
0.31 STEEM,
0.31 SP
Thank you for your feedback. Tracking our budget help to avoid spending money unnecessary. Health expenses should fall under saving (unforeseen circumstances and emergency).
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