Since the first lockdown began four years ago, I started managing my own budget very carefully. With a few months on half my income, and forced to spend my savings, I knew what I needed to do first, to make sure I wasn't spending more than I earned.
I reviewed my budget and was ruthless in cutting costs. I even halved my food budget, and spent more time cooking and planning my meals better.
When was the last time you reviewed your budget? How often do you check your bank statements to make sure where your money is going?
I was shocked when I realised I was paying 1,500 MZN a month in bank charges, across all the bank accounts I had. An expense I didn't even have in my budget. Have you checked how much money is being spent on real expenses? Do you record every cent you spend? Budgeting and sticking to our budget can help us save more, pay off debts faster and manage the money we have.
What is a budget? A budget is a spending plan for our money. It helps us manage our income and expenses to make sure we are not spending more than we earn. Having a budget will help you identify whether you have surplus money (left over) or excess debt at the end of each month. Surplus money will allow you to save and invest every month, whereas with excess debt your attention will focus on paying off that debt and not missing the payments required.
Why should you make a budget?
• It reveals your spending habits
• It helps you to be proactive rather than reactive.
• It helps you identify your bad spending habits. Be honest with yourself about what you spend.
• It helps you not to spend more than you earn.
• It helps you prioritise paying off your debts.
• It helps you save to prepare not only for emergencies but also for retirement.
• Following a budget can give you peace of mind, because you always know where you stand.
We make budgets so that we can stay focused and achieve our financial goals.
Making a budget is the most important thing you can do to manage your money.
