Budgeting in the new year.

 Happy New Year!!!!!!!

Welcome to 2016!!! 2016 promises to be a year of exciting possibilities, financial breakthroughs and opportunities............. Can I hear a resounding AMEN?

*********laughs*************
I can literally see the wheels turning in your head, like, when did she become a preacher?
I know right, but I believe in prayers, I also believe that there is power in the tongue, so once again please say a resounding AMEN to my statement above....

************grinning widely*************************
I decided to start the year with a prayer, because I know we all need prayers, but I also know that prayers without actions will come to naught.........

For the prayers above to come to pass, you need to take some actions............ You need to be disciplined about your finances, you need to make your money work for you, you need to have a financial plan (what I'd like to call a budget in this context), you need to master the art of Budgeting.

Most of us who work in corporate organisations know that our companies undergo a budgeting process yearly, where they make a budget or some sort of forecast for the coming year. These budget serves as a guide of some sort to these organisations.

What is Budgeting?
Budgeting is the process of setting financial goals, forecasting future financial resources and needs, monitoring and controlling income and expenditures, and evaluating progress towards achieving the financial goals.................Did I hear someone say big grammar?

For budgeting to be successful, you need to be able to answer these questions:

• Where are you now?
• Where are you going?
• How will you get there?

When you can answer these questions effectively, making a budget will make more sense to you.

A budget can be monthly, quarterly, bi-annually etc. 

In my experience, the monthly budget is best, because it allows for flexibility, seeing as how most people don't have a static budget each month. Since your expenses will vary monthly, it makes sense that you should make your budget monthly. This can be tasking at first, but it becomes easier with time.

PREPARING A BUDGET

So you have decided to start preparing a budget, and you don't seem to have any idea what to do?

Here are some basic tips to follow:

• Record everything: In order to be successful at budgeting, and to keep accurate budgets, you need to record all your income and expenses. Do not leave out any source of income, even if you are given a cash gift, please record it as part of your income for the month in which you received the gift. The same goes for expenses, you need to record all expenses you incur, whether they are one-off or recurrent. This helps you keep track, and makes future forecasts easier, especially if you are just starting your budget. You can record everything in a notebook, on MS excel, etc. There are some apps that can also help with tracking your expenses

• Do not guess: Before you can realistically start making budgets, you need to undergo a trial period of about 3 months, wherein you do a daily recording of income and expenses. What this trial period does for you is this: It gives you an idea of what exactly you spend on each expense line monthly, and what you earn from each income line monthly. Your budget should reflect this truth. 
• Be realistic: This originates from point 2 above. Your  budget should reflect your lifestyle. If you know that you cannot realistically cut costs on some of your expenses in real life, please do not cut these expenses on your budget. For example, if you spend N20,000 monthly on transport, this should be reflected in your budget under the expense line called transport. Under no circumstance should you budget N12,000 for transport, when you know you actually spend N20,000. If you do this, you will not only be deceiving yourself, you won't be able to plan effectively with your budget.
• Do not budget with money that you don't have with you: For example, if you are expecting an amount of money from someone in a particular month, don't let your budget reflect that money yet. Money not with you isn't yours yet, and as such you can't make plans with that money.

Your budget is only as good as your ability to stick with it (this is where discipline comes in). Your budget should serve as your financial roadmap. It should give some sort of guidance, and also give you an insight on your spending habits.

Ability to stick to your budget, will help you spend less, save more, and in essence make your money work for you in the coming years. 

Finally, I say this to you: Having a budget is the first step towards financial freedom.

Till next time,

Peace and Love,

Lade.