It is almost every person’s goal to get financial freedom. By this, I mean being able to live knowing you have enough savings, done enough investments, and also enough liquid cash for your spending.
Because of this, we look for ways to work to attain this objective. We formulate strategies that will help up step by step to financial freedom. Among the strategies, is budgeting.
Creating a budget is one of the wisest decisions you can make. Having a well-formulated budget assures you that every bit of cent you have really worked hard to earn is being spent in the wisest way possible, that you are right on track to achieve your goals and you can afford to do the things you like doing.
Having a budget helps to regulate your spending to help you avoid adopting a life that goes above your means as this bad habit can, in most cases, lead you into debt.
But, again, if the budget you have created is not working so well for you, then the fruits that the budgeting process is supposed to provide will be very much unattainable.
This very moment you are reading this article is the best time to evaluate and see whether your budget is helping you make strides or if it isn't. If it is not then you have to make some changes.
You might ask, “how would I know it is time to modify your budget?”
Today we look at some signs to look out for to make you rethink how you spend your money.
A budget is a tool for your convenience. It is supposed to help you by guiding your spending. It is not meant to create in you a feeling of deprivation or to make you resent your month’s expenditure plan.
If the budget makes you feel like it is too limiting then you may be bound to abandon it for it has become harder to stick to.
There are various other budgeting methods that you can try for every income period while in search of one that will suit you better.
If you find yourself going over your budget routinely, you have to reassess your budget. Going through it severally simply means that it isn't a great spending plan for you. Instead, your budget becomes a lot more of a wish list or an aspirational document than an actual guide to help improve your financial situation.
If it is becoming difficult to consistently stick to your budget, then it is time to find the reason why and to make a solid plan which you can comfortably live with. You could start by tracking how you spend your money for 30 days to see at which points you might be going overboard and why. If you identify an area or two where you constantly overspend, then you might have to rework your spending plan to allot more resources in that area while making cuts in costs of an equivalent value in other areas
One of the main reasons people have to make them adopt budgeting is because they desire to make sure they get those things they consider important with their money. Take saving money for retirement or saving for a new car for example.
If you notice yourself stagnating or you are seeing no significant progress as you had projected on your goals despite having a budget, then you may have to rework it to identify other areas to reduce spending and free more money to focus on achieving your financial goals.
Life is not steady. Many events happen from time to time. Consequently, our incomes get impacted by these events.
If your income changes by a lot this year, either going up or down, because of changes in your life maybe you have changed jobs, you are expecting a baby or you have more mouths to feed now you might have to review your budget.
If the budget demands a review, then it would be best if you did that as earliest as you can. Make sure you explore the various approaches to budgeting and identify a solution that will make sense to you so your budget provides the guidance and support you need to make smart spending choices all year long.
Finances are a worry not only to you but also for people all over the world. But if you find yourself constantly stressing about whether you will have enough money to pay your bills at the end of every month, or you stay up late every night worried about the potential disasters that can drain your bank account, editing your budget could help you get peace of mind and feel better about your finances.
Sometimes things can get out of control, and there will be periods where you find yourself in a tight spot, financially. But if in ordinary times you find yourself:
Then the budget you are using is not working.
Revise your budget. Find out why those things are happening. You might have to examine your spending and redistribute your monthly income.
Here is the good news. You are not limited to that one method of budgeting. If the current method you are using isn't working well for you, consider a 50/20/30 budget that gives more flexibility. This kind of budget does not account for every shilling, giving you the liberty to spend as you would desire.
Remember what I said. A budget is a tool for your convenience. As much as it provides guidelines for you to follow, you are the boss. It should work for you.