When 2022 came to a close, most Kenyans were faced with the annual budgeting challenge. This is because for most in the employment world, salaries usually come early in December, and herein lies the danger.
If one decides to free-wheel it and go through this period without a properly structured budget then chances are that by the second week of the infamous January/Njaanuary, they'd be exploring money-borrowing apps and asking friends for soft loans.
This is where the 30-30-30-10 budget kicks in. It is a simple tool that can help one navigate this tricky time of the year and avoid attracting hard times at the start of 2023.
Once adopted and implemented, one can then decide to carry on using it for the rest of the year and come back at the end of 2023 and take stock of any notable improvements in the personal finance sector.
Read Also: The Ultimate Personal Budgeting Guide
The 30-30-30-10 budget is a personal finance strategy that involves dividing your income into four categories namely; fixed expenses, financial goals, flexible spending, and savings.
Under this simple budgeting method, you would allocate 30% of your income to fixed expenses, such as rent or mortgage payments, any items bought on hire purchase, utilities, and statutory payments such as NHIF. These are expenses that are necessary for your daily life and are generally not flexible and non-negotiable
The next 30% of your income would be set aside for financial goals, such as paying off debt or saving for a down payment on a house or a car you have been eyeing. The aim of this category is to help you prioritize and allocate money toward your long-term financial goals.
The third 30% of your income is for flexible spending, which includes things like groceries, eating out, travel, hobbies, and entertainment/sherehe. This category allows you to have some flexibility in your spending, while still keeping it within a set budget.
The final 10% of your income is for savings, which can include an emergency fund, retirement savings, or other long-term financial goals. This portion of your budget is meant to help you save for the future and be prepared for unexpected expenses, which are almost always guaranteed.
Overall, the 30-30-30-10 budget is meant to help you manage your money effectively and achieve your financial goals by dividing your income into specific categories and allocating a set percentage to each one.
It can be a helpful tool for anyone looking to take control of their finances and make a plan for their money.
The 30-30-30-10 is designed to help people allocate their income in a way that allows them to meet their basic needs, save for the future, enjoy their lives, and be prepared for any unforeseen expenses down the line.
The good thing about it is that it's flexible and can therefore be easily adjusted based on a person's individual financial situation and goals.
There are several reasons why budgeting and having tools such as the 30-30-30-10 model can be of help to anyone looking to change things up from a financial perspective.
Here are a few;
Read Also: 6 Simple Steps to Create a Working Budget
On the other side of the coin, going through this festive period and/or 2023 without a clear budgeting plan is a recipe for disaster.
If you don't budget, you may not have a clear understanding of your financial situation and may overspend or under-save for your future financial goals. This can lead to financial instability and difficulty in paying bills or saving for emergencies or long-term goals.
Additionally, not budgeting can increase the risk of incurring debt and may lead to financial stress or financial difficulties in the future. It is important to budget and manage your finances effectively to ensure financial stability and security.
Overall, budgeting is a valuable tool for anyone looking to improve their financial well-being and achieve their financial goals.
Here are a few budgeting tips for anyone looking to change things up in 2023;