Have you ever found yourself borrowing money from a friend or dipping into your savings to make it through payday month after month? If your answer is yes, well, you’re not alone.
Inflation seems to be at an all-time high these days, and it’s tough to keep up with the rising cost of living. But then, how do you move from “vibes and inshallah” budgeting to a realistic plan that guides your spending?
The answer is intentional and evaluative budgeting.
What is evaluative budgeting?
Intentional and evaluative budgeting requires that you consciously allocate your funds towards a particular goal and regularly assess your budget to determine if it’s meeting your financial goals.
For example, suppose your goal for a quarter is paying off a debt. Creating a savings plan called ‘Debt Payment’ and setting aside an automated monthly amount to pay keeps you intentional as you cover other expenses. Then, at month-end, you review whether you need to increase the percentage allocated to that course, based on your income.
How to budget better
Bills are inevitable; that’s a fact of life. However, intentional and evaluative budgeting serves as a shield against overspending, helping you weather the storms of fluctuating expenses. If you’re struggling with budgeting, here are some steps you might consider:
- Adopting the 50/30/20 rule: This rule divides your income into three categories: 50% for essentials (like housing, utilities, and food), 30% for personal expenses (such as dining out and entertainment), and 20% for savings and debt repayment. It’s a simple yet effective way to allocate your funds wisely.
- Identifying your needs and wants: Distinguishing between needs (essential expenses for survival and well-being) and wants (luxuries or non-essential items) is crucial. Prioritizing needs over wants helps rationalize spending habits and cut unnecessary costs.
- Automate Your Savings: To stay on track with your budget, consider automating your plans. Whether it’s your flexible savings or a targeted goal, connecting your salary account enables direct payments without manual effort. This keeps you disciplined and committed to your budget.
- Track your spending daily in an Excel sheet so you can trace where your money goes and quickly make necessary adjustments.
- Tailor your budget to fit your lifestyle. Not everyone’s budget is the same, so it’s crucial to create a plan that suits you and adjust it over time.
- Watch episode 3, ‘Vibes and Inshallah Budgeting,’ of the money series: Sometimes, practical advice can be found in unexpected places. This particular episode delves into practical budgeting techniques that might resonate with your financial situation and provide valuable insights.
In conclusion, shifting from wishful thinking to crafting a realistic budget demands taking actionable steps, not just talking about it. Begin by downloading the Zedcrest Wealth App today and utilize the autosave feature to protect yourself from unexpected bills.
