Frequently asked questions about budgeting
Frequently asked questions about budgeting:
1. How do I start a budget?
Before writing down anything on paper, you should think about your goals. These goals could be short-term, mid-term or long-term. Short-term could be a few days or a week, mid-term could be months and long-term could be years.
2. What does my goal have to do with budgeting?
If you don’t have any goals, it will be extremely difficult to stick to your budget, because there will be no consequences if you just spend your money. If for example you want to buy yourself a new car, every time you spend your money on unnecessary things, the chances of you getting yourself a new car becomes lower.
3. Are there rules to these goals or can I just write down anything as a goal?
There aren’t necessarily any rules, but there are guidelines which are easy to remember. When writing down your goals use the SMART principle. This means that your goals must be Specific, Measurable, Achievable, Realistic, and Timely.
Your goal must be Specific; you must know what it is that you want. They must be Measurable. For example, you can’t say you want to buy an affordable car; you must be specific and say that you want to buy a car worth R100000 by December 2018 or whatever time frame you give yourself to buy the car. Achievable meaning that the goal must be reached in the time you want to achieve it. Alternatively, you can say that you want to pay all your debt by end of October 2018.
4. After writing down my goals can I now begin with my budget?
Start by writing down your sources of income and how much money you get per month. Thereafter you should write down your needs and wants and obviously prioritising your needs.
Needs being something you can’t live without. For example, one cannot live without Food, shelter, rent, clothes etc.
Wants to be the things you desire or wish to have and those things that you can live without. For example, the latest cell phone, fastest car etc.
5. What happens if I don’t budget?
Most of the time if you don’t budget, you tend use your money buying unnecessary things, leaving you with no money during the rest of the month, which often leads to people borrowing money to be able to attend to unexpected needs. It is not only the lack of financial discipline that makes you get into the debt trap but also some sudden emergencies for which you may not have prepared. Also, there are some people who are struggling to pay off their current debts and still borrow money to maintain an expensive lifestyle.
6. What happens if I go over budget?
When you go over budget you tend to feel defeated, but that’s not the end. There are 5 ways to help you recover from going over your budget.
Step 1: figure out what happened, it is important to find out why you overspent and ask questions like; was the expense necessary? Why did it happen? Research proves that the questions come out of a budget that does its job by accurately tracking spending.
Step 2: make necessary adjustments for the next month.
Step 3: make goals and plans as aforementioned
Step 4: stick to your budget, make budgeting permanent if you repeatedly go over your budget
Step 5: never cut your savings amounts.