When it comes to Budgeting a lot comes to mind. We think figures, income and expenses which is not bad at all because that is exactly what our focus is, our desire to manage what comes in, what goes out and where are they go to. However, budgeting in itself is more psychological than we imagine. What’s the essence of planning a budget when there is no discipline to follow through with the laid-out plans? Let’s look at 4 steps of building a household Budget.
Know your income
For me, I believe one should know exactly the total income that comes in every month. If you are an entrepreneur, a salary earner, or an investor, having an honest grip on this information gives you an overview of the numbers you would be playing it.
Know your expenses
Now this is where there is always a problem. Expenses can be broken into avoidable and unavoidable expenses. Avoidable expense always pops up every now and then, unplanned dates, loan requests from friends and family, and new sneakers or shoes you saw on Instagram, there are so many avoidable expenses but you need only one solution: discipline. Unavoidable expenses are those expenses you must incur like light bills, important subscriptions, groceries, foodstuffs and all. You should always separate your expenses into these two categories and consciously allocated resources for them.
Planning
This is the most important phase in budgeting; this is where you plan how much you will spend, what you consider worth spending on and what you will ignore Once this is done you have to make up your mind to stick with your plan no matter what.
Discipline
As I have mentioned time and again, the most crucial part of budgeting is the discipline to stick to the budget, If you successfully apply this religiously you are bound to see a marked improvement in your finances and just maybe, you can eventually save enough to invest in your future.
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