There is only one remedy to taking control of your finances, making a budget. That means, keeping track of the cash that comes in and cash that goes out. Budget is not a one-time thing but a task that is done consistently becoming a habit which ultimately transforms into a lifestyle.
It doesn’t matter if you’re living paycheck to paycheck or earning a six-figure salary at end of the year, you need to know where your money is going if you want to have a firm grip on your finances. Unlike what you might have heard, budgeting isn’t an exercise in deprivation that restricts what you spend money on and cuts out all the fun things in your life. It’s really about understanding how much money you have, where it goes and then planning how best to allocate those funds.
A budget is simply a spending plan. It tracks your spending, letting you know where your money goes and further informs you whether you’re going in the direction you want to be. It puts you in charge and in control of every shilling that you earn or spend. There are a number of budgets out there i.e. 50/30/20 budget, zero-based budget, amongst others. I would recommend the zero-based budget. With zero-based budget, your income minus your expenses equals zero.
Next time, we will delve further and highlight the importance of budgeting.
Kelvin Memia is an IT Specialist based in Nairobi. He is passionate about personal finance and loves seeing individuals and families alike enjoying a debt-free lifestyle.
He is a graduate of University of Nairobi where he studied Computer Science (Bsc.) and Project Planning and Management (MA.). He is also a CPA finalist and a Certified Scrum master.
You can drop him a line at kelvin@oloisol.com
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