So you just got paid.
Now, you have two options:
- You can set up a budget.
- Spend as your needs arise.
We all know what the second option usually means: you spend without caution, your bank account deflates quickly like a balloon punctured with a kitchen knife and you run out of money before the next payday.
Common sense says: Spending money “like you just don’t care” is not cool, it’s how people get broke.
And even if you trust yourself to be disciplined in spending, without an actual plan for your money, it’s very likely you’ll go off track.
Hopefully, you can see the good sense in picking the first option. Let’s help you do it.
A good way to set up a basic budget is to divide your income according to the 50-25-25 rule. This is simple and as far as looking out for yourself, is fair.
- 50% of your income goes to essentials
This should include money for such things as feeding (groceries or meals eaten out), transportation (fares or fuel costs), utilities (power, water etc.), airtime, internet and savings for annual rent (which really shouldn’t be more than a third of your annual income).
- Investments, savings and emergencies: 25%
Don’t sit in the dark wondering how to grow your money. Set up a savings goal on ALAT, add a percentage of your income automatically every month and cash in on the 10% annual interest that comes with it. You can also explore stocks, mutual funds and bonds. Just speak to a professional before you commit funds to anything.
- Money to blow: 25%
These are your miscellaneous spends or like I call it, your I-can-do-whatever-I-want-with-it money. Go on dates, buy clothes and shoes, donate to a charity, whatever. It’s up to you how you spend it.
A budget is one more step toward financial stability. Take it.