How To Budget


Whether you’re conscious about it or not, chances are you, like me, have been budgeting all your life. If when you were a little child you blew your allowance on several things at the shop, you budgeted. If, when playing UNO, you made the decision to search the pack despite having a Draw 4, you tangoed with budgeting in that instance. Broadly speaking, the art of budgeting includes a series of ongoing, conscious decisions aimed at a specific goal/s. Financially speaking, it is an economic plan of action for a future period. As humans greatly vary, so does budgeting. It is important to mention that it is not one size fits all, meaning, one budgeting type might work for Jan but it won’t be as snug a fit for Ashley. With a budget, even though it is simple to construct, sticking and committing to it is where the real challenge thrives.  If you’ve never seriously taken on budgeting, just drawing up a budget may sound daunting just thinking about it. The things you’re to financially go without for what seems like a lengthy period of time most likely crosses your mind, contrary to that nightmarish-for-most belief, we at Unpluggd Media are throwing in the mix a life raft.


Stepping outside of a financial view, you’re familiar with budgeting more than you consciously know. Today, there are several more methods of budgeting than there were years ago. We’ve long come from paper and pencil as a method of keeping track of our money habits. We’re now knowledgeable of things such as the 50/20/30 budget type as well as the zero-based budget type. However, exactly how do we budget? 


Accept that this isn’t a one night stand


The most important thing is grasping the fact that this is not a one time only deal. In order to successfully have a budget, the listed items need to be given keen attention and taken care of regularly. Once begun it shouldn’t be neglected and the goal should never stray from your mind. This arrangement, no matter how long, is to be met with a sense of commitment, a clear visual of what is to be achieved at the end and discipline. 


Know your monthly income


This part may seem like a walk in the park to some but in actuality, it can be the opposite for others.  In order to go into budgeting, knowing actual figures play a grand role.  If you’re working a traditional 9-5 job, this part comes easy to you as all you’re to do is throw a quick glance at your last pay stub and reference it.  For those working nontraditional jobs such as freelancers, this part comes with a bit more effort on their part as it is a well known thing that as a freelancer, income tends to fluctuate. So, in order to have a better idea of their monthly income, freelancers would have to calculate their average income from the total income acquired three to six months prior to taking on the budget. Knowing where one stands financially is an important jump-off point when going into a budget.  


Necessary spending, make note


To live the life you live, things have to get spent on. There’s no getting around it. 

Things that support you daily are Fixed Expenses and Variable Expenses. Your Fixed or recurring expenses are things such as rent, mortgage, bills, car payment, insurance, alimony, daycare, loans and monthly memberships such as the gym, yoga or pilates.  Your Variable Expenses are also necessary expenses, except their price fluctuates; for example groceries, home maintenance and repair, medical appointments, vehicle maintenance and repair. Once you arrive at a figure for your monthly spending, that’ll be established as your baseline spending budget.


Personal goals and an umbrella 


When budgeting, people often forget to pay themselves first. They rely on themselves catching up to their personal goals (a trip, a new phone, new wardrobe, new ipad, a car) and plans (business venture, acquisition of land and/or property, moving, college) outside of their contribution to the necessary spending portion of the budget. This neglect, sadly to say more often than not, forces people to use only what remains after the budget’s financial target is realized resulting in personal goals and plans not coming to fruition. These personal goals and plans should be included in the budget so they too can be realized and given the same attention as the main items. Rainy days should also be catered for. For such a day, one should also create and include in the budget a safety net to fall back on which includes an emergency fund and, if you can muster it, a vehicle maintenance fund and retirement fund. With these goals decided upon, all that’s left is to determine how much you’re giving towards it each month. If you’ve got a deadline that you’re working with, go ahead and divide your target figure by the amount of months until the goal and you’ll arrive at the amount you need to set aside monthly to put toward it.


Catering to desire


Budgeting, although often attached with feelings of dread, doesn’t have to be as painful as imagined in your head. Discretionary Expenses focus on what you want to spend on for a change, as opposed to what you need to spend on. It includes fun things like dining out, going to parties, shopping for clothing and entertainment.  It is a cost that one can go without, as the purchases don’t count as necessary. Once this bout of nonessential spending is over, you should still be able to carry on as it is not essential to your financial survival as it doesn’t affect goals and plans in any way, shape or form.   


Ready. Set. Go!


At this point, with these things in place all that’s left to do is start budgeting.  With a clear vision of the goal and once you’re actively tracking spending, you can choose between the following budget types: the 50-20-30 budget, Zero-based budget, The Gig-Worker’s budget, Envelope Budgeting, The Weekly Allowance and even take interest in budgeting apps.  In a future publication, detailed will be the budgeting types previously mentioned with some time spent on Budgeting apps. 


It truly matters not which method you use to stay abreast of the happenings with the money you make and spend.  Once your interest in consciously reviewing your finances and having knowledge of the plans for your money in terms of where it is to be spent and on what, you’re already ahead of where you were when you were just focused on acquiring it.  


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