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Taking the Stress Out of Personal Budgeting

Learn the ways of achieving your personal budgeting goals

Creating and following your own budget is the best preventive measure you can take against unwanted debt and/or a less than healthy savings account. Sitting down to create a personal budget can be one of the things we tend to avoid; after all, we know that committing to a budget involves discipline, and sometimes, sacrifice. Still, budget setting is vital to achieve the most important things we seek in life - especially larger life goals such as owning our own home, starting a business or saving up for our own or our children’s education.

Good planning helps you with stress-free budgeting
Good budget planning will help you take away the stress of personal budgeting and
"keep your fingers on the pulse" of your personal finances.

6 Personal Budgeting Tips

Important tips to keep personal budgeting as stress free as possible include these following suggestions:

Create a financial calendar

List down the expenses you know you will incur throughout the year – including taxes (approximate amounts) so you don’t count money as savings that you will actually need to pay back to the Tax Department. Your calendar should also contain your savings goals, an emergency fund (containing at least three months of living expenses at the very least) and an amount for something you consider a ‘reward’ – the latter might be a holiday or a small luxury you have been setting your sights on.

Follow the 50/20/30 principle for Minimalist Budgeting

This handy principle is a great way to start for those who are new to saving. It stipulates that you should allow yourself to spend 50 per cent of your income on essentials (including groceries, housing, educational fees, electricity and water bills, transport/ fuel etc.), set aside 20 per cent for savings (this includes debts and emergency funds), and allow yourself 30 per cent of your income for the things that enhance your lifestyle – the list can include meals out, cable television, sporting/ fitness pursuits, etc.

The rule can have fantastic indirect effects on your health, since a detailed analysis of your expenditure can reveal habits that do little good yet place a considerable dent in your finances from week to week. These can include late nights, alcohol consumption and other addictive pursuits that require expenditure and take up a considerable chunk of your time.

List down your weekly expenses

When it seems like you are never able to save, it is vital to analyse exactly what you are spending your money on. You can do this in two ways: either by listing down absolutely everything you have purchased throughout the week, or by using your debit or credit card to pay for all items – the latter is probably the easiest way to keep tab of hidden traps that prevent you from setting money aside every month.

Identify ways that you can cut costs

It is vital to look into essential such as insurance coverage, in case there is a way that you can lower your premium yet still have essential coverage. For instance, your insurance company might give you a significant discount if you take both your home and auto policies with them. You might also decide to raise your deductible, or to make your home more disaster resistant/ secure. Don’t assume you are getting the best possible deal; shop around until you find the company that offers the best service at a fair price.

Start a new business to increase your personal budget
If you have a skill that can be marketed, it might be a good idea to consider starting up your
own business, that will give you more independence and increase your chances to earn more.

Study the interest rates of all loans

Try to pay off loans with higher interest early; use online tools to study the exact amount you could save on your mortgage, for instance, by making higher monthly or yearly payments. If you are currently negotiating a mortgage, try to opt for one that takes up less than 28 per cent of your monthly income. Otherwise, you could face major struggles in meeting other financial obligations or find that you are having to tighten your belt so much, that your quality of life suffers.

Try to increase your income

You could be at a stage in your life where you feel that you have built enough experience to start a new business. If you are content with the stability offered by your current job, there is no need to quit immediately. Start doing something you love and excel at part-time, put in a minimum financial investment but maximum effort in your free time, until you feel that your business is solid enough to dedicate yourself full-time to.

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