The 30-30-30-10 Budget of January & Beyond

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

What is the 30-30-30-10 Budget?

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.

Read Also: How to Budget and Save a Lot of Money As an Employee

Why Do It?

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;

• It helps you manage your money effectively: By creating a budget, you can see exactly where your money is going and make informed decisions about how to allocate it. This can help you avoid overspending and save money for important expenses.
• It helps you reach financial goals: Whether you want to save for a down payment on a house or pay off debt, a budget can help you plan and track your progress toward your financial goals.
• It helps you avoid financial stress: By being in control of your money, you can reduce financial stress and anxiety. This can help you feel more secure and confident in your financial decisions.
• It helps you make better financial decisions: With a budget, you can see the long-term impact of your financial choices and make decisions that are in line with your financial goals.

Read Also: 6 ‍Simple Steps to Create a Working Budget‍

What is the Worst Possible Outcome?

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.

Read Also: How to Plan and Create your 2023 Annual Budget 

Wrapping Up

Here are a few budgeting tips for anyone looking to change things up in 2023;

• Make a budget and stick to it: Determine your income and expenses and allocate your money accordingly. It is important to have a clear idea of where your money is going and to try to stick to your budget as closely as possible.
• Track your spending: Keep a record of your daily, weekly, and monthly expenses. This will help you see where you can make adjustments.
• Cut back on unnecessary expenses: Look for areas where you can save money, such as by canceling subscriptions or cutting back on dining out, or cutting down on sherehe to once a month.
• Shop around: Don't be afraid to negotiate or shop around for the best prices on things like insurance, groceries, and other household expenses.
• Use cash or a debit card instead of credit: Using cash or a debit card can help you stay within your budget and avoid accumulating credit card debt.
• Set financial goals: Determine what you want to save for and create a plan to achieve your goals. This could be a down payment on a house, a vacation, or saving for retirement.
• Seek financial help: Consider consulting with a financial advisor to get additional tips and guidance.