5 Basic Budgeting Steps

10:00 AM

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Frugality includes all the other virtues.

Basic budgeting isn't as hard as you think. Still it is a challenge for many. I know because I'm surrounded with people struggling to make ends meet. I too, have had my fair share of financial struggles. Had I discovered the 5 basic budgeting steps earlier, I wouldn't have gone through it.

Growing up, I've never seen my mother do a budget-check. I've never seen her concerned about saving. She's a spender.

When I started working, my colleagues get excited about loans. Loans! And not having the foundation or literacy about financial management, I thought it's a good thing and joined the bandwagon.

Having attended several financial seminars, read financial books and blogs, and being a trying hard Ms. Frugal, I've learned my lessons. Here are 5 simple budgeting steps I'd like to share:

5 Basic Budgeting Steps 

1. Break it down! 

I've learned this from Bo Sanchez. Break down your income into three parts:

  • 10% - Tithe or give back to the universe.
  • 20% - Invest in your choice of investment. I prefer paper assets and profit sharing because I'm not really business savvy and I don't have time to focus on a physical business.
  • 70% - Spend.
Break down your income

2. Know the difference 

Do you know the difference between your "wants" and "needs"

You need to eat food, but you want ice cream and chips.  I'm not saying you should never eat junk food. Ideally, you shouldn't but that's a different topic.

If you can't help it then can do it in moderation. 

The point is that: you don't NEED junk food. You just want it.

"wants" and "needs"

3. Compare.

Before buying, research, ask around, or check the price of the item or service you need. Compare and see which brand offers the cheaper price but doesn't compromise quality.

Remember: you get what you pay for. 

So if you buy really cheap thinking you've saved, you end up buying again because it usually doesn't last. 

4. Make a plan and have a target.

Saying "I'm going to save money" is very vague. Be more specific.

  • How much are you planning to save? 
  • When is your target date to achieve this amount? 
  • How are you going to get to that financial goal
Plan. Make a system. 

Be lenient with yourself as change may happen along the way. Or there may be unforeseen events in which you won't be able to set aside the certain amount you planned to.

But stick to your goal. Eyes on the prize.

what do you want?

5. Be patient. 

Nothing worth having comes easy. You can get impatient if you don't see any progress or change right away. 

Think five, ten, twenty years from now. Remember the power of compound interest.

Find your emotional why

  • Why do you want to save? 
  • What is your intention? 
  • What is your drive?
Dig deep into your soul.

Imagine your future self.

Are you going to thank your present self when you look back? 

kid thinking deep

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  1. Very informative budgeting needed in this day and age.
    Thank you for sharing with the Clever Chicks Blog Hop! I hope you’ll join us again next week!

    Kathy Shea Mormino
    The Chicken Chick