It's definitely been a while! I have been caught up with some school-related matters and hence it took me a while to write up this post. Anyways, polling day just passed and as a first-time voter there was a sense of nervousness and excitement as I placed my vote. Nevertheless, I hope all of you managed to use this long weekend to take a good break and recharge!
I want to share a little bit about budgeting in this post. I would say that budgeting is the single most important aspect of personal finance management. A simple example to elaborate the importance of budgeting: Person A earns a salary of $8000 a month, but spends $7000 monthly. Person B earns a monthly salary of $3000, and has a monthly spending of $1500. Even though B earns less than half of A's salary, he has more left in his bank account at the end of the month, to be either kept as savings or put into different investments. That is the power of budgeting.
The first step to budgeting is for one to understand where their money is going to. I strongly recommend that you take down every single single cent that you spend for at least one month, before budgeting, to get a clearer picture of your spending habits. Without this step, I find it hard to create a budgeting strategy as I would have no benchmark to gauge by, and no way to understand where I'm overspending in.
In order to track your spending, I would recommend either getting a money-tracking app on your phone, which would make it much tracking much more convenient, or setting up your own tracking list either on Microsoft Excel or Google Sheets (there are plenty of guides for this available on Youtube!). Personally, I use a Google Sheet as my main tracker as I found it difficult to keep up a habit tracking using mobile app, for one reason or another. Ideally though, both works fine, as long as you manage to achieve the objective of tracking your spending.
Once you've got that part down, you can then plan for your 'budget cuts' accordingly. I personally like to break down my budgets into several smaller parts, such as 'food', 'transport', 'essentials' etc. I will then find out if I am overspending in any of these categories, and try to cut down accordingly on unnecessary splurges. This includes taxi rides and food deliveries, which I often found to be the biggest budget killers for me (I really do need to be managing my time better....). One thing I would advise based on my past experiences though, is to be gradual and patient with your budget cuts. If done too abruptly and harshly, you could lose interest as you keep missing your own budget cuts. By cutting your spending gradually, you allow yourself to build confidence in your own finance management along the way, and cultivate healthy spending habits.
Another advise I have is to be frugal 'healthily', in the sense that one should not completely obliterate any form of enjoyment from your budget. It is important to understand that it is completely healthy for one to let loose every once in a while, and it is important for you to continue pursuing your hobby, but you just need to do so in a financially responsible manner. I never turn down a good night out with my friends if my budget allows for it!
Importantly, budgeting should not be seen as sacrificing your own happiness for financial gains, but seen as a process for you enjoy in a responsible and healthy manner. There are many models out there for budgeting (such as the 50/30/20 rule; look it up!), but ultimately you should tweak each model carefully to suit your own situation and needs. It is definitely not easy to start as I myself still find it an hassle to have to record every transaction that I make, but believe me, that little bit of sacrifice can go a long way and nowadays I am recording them subconsciously...
Stay safe and healthy,
T
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