Dynamics of Budgeting (Part 2)

From our last post on Dynamics of Budgeting Part 1, we were able to lay the foundation into budgeting for recap, please check  (Here), we will be moving a step ahead, and I will love that we go a bit practical with either a notepad and pen for you do the write up with your electronic gadgets.

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I) Now let us identify all your source of income:

v  Monthly Salary.

v  Sales Profit.

v  Monthly Upkeep from big brother and sisters.

v  Other income.

II) Pen down all Expenses

 Fixed Expenses (This are necessary expenses that stay unchanged from month to month)

v  Tithe.

v  Rent .

v  Transport .

v  Call cards (Phone Bills) ** prepaid customers with defined credit limit.

v  Monthly Toiletries.

v  Cable TV subscriptions.

v  Etc.

Dynamics of Budgeting (Part 1)

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As an individual, family or corporate organization, we have had to do a form of budgeting either once or twice.

 What then is the term BUDGETING? Budgeting is an estimate of income and expenditures for a period of time. Budget is futuristic; it is a workable plan of all income and expenditure for a specified future period. To have a good understanding of wealth and equally be wealthy, budgeting plays a crucial role. The formula for Wealth is:

                    Wealth= Time + Money.  

We must understand that to be financially independent our passive income must be greater than our expenses.

Reasons why you need a personal Budget:

      1.   It is easier to become wealthy and be financially free with a personal budget: Personal Budget will open your consciousness to where your money goes every month, the truth is most of us know we spend money but do not have a grip on what and what we spend on and before we know it we are broke and indebted in the process, eagerly waiting for the next pay check/salary as the case may be.

         2. It is easier to stay out of debt: With the aid of a Personal Budget you will avoid the regular pitfall of recurring debt traps.

    3. It is easier to get out of debt faster: Personal Budget brings your debt to your face and makes them a priority to be cleared, unlike when you do not have them written down. Sometimes we genuinely forget we owe some money, other times we pretend to forget *wink*

 4.  It helps us save, especially targeted savings: Personal Budget will help you develop a saving culture especially targeted savings like buying or building a house, buying a car, getting a degree or any other capital projects.

        5  It helps with overcoming bad spending habits: Personal Budgeting will save you from bad spending habits, as it will starve the cravings with little or no allocation of funds to nourish such

      6. It helps you understand your ‘Financial self’ better: With Personal Budget you will know your true Financial Self in terms of your position or standings financially.

7.    It helps you achieve your personal financial goals: Financial goals are key drivers of Personal Budget, hence with a functional budget in place, achieving your financial goal is on track.