How to Budget Effectively?

There are many ways to budget your monthly spending and everyone had to find out what suits them and their lifestyle best.

To get you started, here is a simple guide:

Calculate a weekly or monthly budget based on your income and estimated expenses. It is important to differentiate between essential and non-essential expenses

Example:

  • Essential: Rent, Bills, Groceries, etc
  • Non-essential: Eating out, gym membership, haircuts, etc

There are two popular approaches to budgeting.

Budget for non-essentials

  • Calculate how much money you will need to spend on essentials such as rent, grocieries, insurance, etc. and subtract this amount from your total income.
  • Once you have allocated the essential expenses, you can calculate how much money you have left for non-essential expenses such as going out, etc.
  • For example, a weekly budget calculation would look something like this:

(Total income – total estimated essential expenses) / number of weeks

Monthly budget using categories

Think of categories to group your expenses under and estimate how much money you will roughly need for each category. With this method,it is very useful to use a budget app or a spreadsheet to keep track of what you are spending money on and under what category these expenses fall.

Be sure to keep track of all expenses, no matter how small!!