Practicing the Art of Budgeting

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A reader requested on a post about budget. I couldn’t be happier since this is one of the most sought after topics with regards to finances. And this is already a good starting move towards smart finances. So I applaud her for this suggestion.

A budget is a financial plan that lets you allocate future income and expenses. Even more having one lets you identify how much you are earning and how much you are spending. Truth be told, making a budget takes a lot of effort. You need to list down your income sources and expenses. Even the little details must be listed. No stone left unturned. Even worst, sticking to your budget takes another world of effort. It is like having a daily schedule but you can’t follow. Setting an alarm clock only to stop it and wake up few hours later. That also holds true for budgeting. You may set up this much amount then when you proceed you won’t be able to follow it at all. I am so guilty of this one!

So in order for you to have a budget and stick to it like glue (wow it rhymes) , here are user-friendly (not friendly-user) tips.


Before having a very simple budget think of a financial goal you want to achieve. Do you want to save 50,000 by the end of the year? Do you want to pay your debts before June? Do you want to save to buy a 2 Million house and lot? Do you want to save for retirement? Do you want to be a millionaire, so freaking bad? The reason being why a goal is important so that you will know where your money goes and it will keep you motivated to stick to your budget. It is like finding an inspiration among it all. And having one is ideal. So let me ask you, what’s your financial goal? Think about it, picture it, savor it.

Track your money.  

We know how to keep track of our income. But the question is, how about our expenses? Every peso spent has a great impact to your money. I suggested before having a small notebook with you anywhere you go so you can be able to list down the things that you bought and the income you received. There’s even an android app that you can use. Check out the list here. Every day for a month (I know this is tiring) see to it you get to track everything you buy from groceries to your coffee. Keep a copy of your bills and take note of the receipts. Having this will let you identify your spending habit and will also dictate your budget. Then subtract your expenses to your income. Crossing my fingers it is positive. That means your income covers your expenses which is good. If it is negative, then perhaps you might want to go back to your expenses and check which ones do you spend more. Now do the math here. Get back here when you are done.

Create the budget. 

After defining your expenses and income it is now time to make the budget. To make your life simpler, divide your income into the following, Expenses, Tithe and Savings. Let us now work on the percentages. Tithe must be 10% or it could be 5% if you think you cannot be able to shell that much yet. The Savings percentage would be dependent on you. However, I highly suggest 20% of your income. If you could go more much better! So you are left with 70% of your income to your expenses in this example. 

Divide the Percentage (optional). 

The only items you need to divide would be the 20% savings and the 70% expenses according to the example above. The 20% savings can then be divided to investments, insurance and emergency funds. Your call as to how much. Same goes with your expenses. Identify how much will go to your bills, groceries and more.

Stick to the budget. 

The most dreaded step ever! If you think you would get overboard with your budget, remember the first step. Rekindle why you are doing the budgeting again. Even if you miss out on something because you didn't spend, always remember that you would be gaining in the end. Keep yourself inspired by looking back at that tangible goal. Replay it when you are in the verge of spending.

Say yes to reward. 

Now I know we are talking about budgeting and sticking to it however, it is always ideal to also give yourself a little reward every now and then. For instance, if you have saved above 20% for the month, why not manage to get your favorite latte. Do not go overboard however with the rewards or you might be exhausting your expenses percentage. Keep it at a minimum.

Are there are tips that you want to suggest? Remember, share and inspire others! 

P.S. To those doing the 52 Week Money Challenge and 52 Week Money Challenger Version 2, it is Week 3 already! Did you deposit the next amount yet?

P.P.S Want to know more about investing, savings, stock market and more, check out my reference here. You can download free ebooks and resources too.