We are quite familiar with the yearly budget speech by the finance minister. It is an annual exercise where the government allocates spending from available income. Assume you are your own household’s finance minister. Would you consider preparing your own family’s personal budget?
In this section we shall try to help you prepare your annual family budget – no easy task. But hey, if the minister can do it, so should you!
Preparing a budget may be the best way to get in control of your finances and know exactly where you stand financially. It helps you map what income you receive and what expenses are being incurred. It therefore enables you to direct your money to where it is needed most, so you can stay on top of bills and start putting money towards your future goals such as for education, a holiday or your retirement!
Depending on the result you may need to take steps to review your position. For example, if it is clear that your monthly expenses are leaving you with no savings, you must start with removing any non-essential items. Any savings from these can go to achieve your goals and perhaps even your retirement.
If you have a surplus (thumbs-up!) after taking into consideration any future savings, your next step is prioritizing. Check if you need to setup an emergency fund which may cater for any unexpected damages to any of your assets such as vehicles or appliances. Also remember to consider home maintenance and any other one-off similar expenses. With any surplus you may start saving for a short family holiday or even to replace your vehicle, for example.
Finally, the most important thing about a budget is to stick to it at all costs!! Essentially it is all about being disciplined with your finances. Money does not grow on trees and saving is a lot harder today than what it used to be.