It’s ten days to payday and you are broke. You become a zombie borrower. You park your car at home because you are low on cash to fuel it. Biscuits, wafers and junks become your choice rather than good food at the office cafeteria.
You didn’t have any plan on how to live through the month. You didn’t know the importance of budgeting and personal finance. You were spending your salary as it came until it was the twentieth of the month.
You had been happy with slotting in the ATM card without checking your balance until it reached the limit.
Therefore, you resorted to borrowing to survive the remaining ten days. You told yourself, “When salary comes, I will be fine.” Salary comes, but you don’t feel on top of the world because you must pay what you owe. You grumbled as you returned the money borrowed.
Salary is a diminishing reward, no matter how much it is. You earn to spend most of it.
But if you practice budgeting, you can make your salary an effective tool for your personal growth. The best time to set up a budget is during those ten days before salary arrives. It helps you to realize three things:
Planning Shows Needs are More Important than Wants
When you put up a budget, you write down all that you would like your money to do for you. It will range from buying foodstuffs, to watching a movie every weekend. You cost all of it and place it beside the amount you earn.
You subtract the luxuries from the essential commodities. You throw out three of the four weekends for movies and direct the money to a special savings account for surviving the agony days.
By the time, you add and subtract with a realistic approach to reducing your wants, you might realize that you spend so much on the least important things.
Your True Financial Strength Will Save You
The true state of your personal finance is usually unclear if you spend your salary without proper planning.
All you see is a big purse where you can pick money to solve all your problems. By the time, the purse dwindles, you are unable to curb their spending, and become a celebrity debtor though multiple borrowing.
However, if you put up a budget, you are able to know how much spending opportunities your salary provides. You will be able to realize what economic class you belong. Are you actually a high, middle class or low class?
Are you comfortable or struggling? Budgeting helps you realize it.
There is Always Something to Save
There is a special rule that is good to follow when planning a budget: Save five or ten percent of your earnings before you start spending. A good way to keep to that practice is to give a standing order to your bank. This allows the bank to pay a certain amount from your salary into another account.
However, if you would not go by a standing order, it is very important to figure out an amount to save even before you plan other things. You need savings to protect you during the 'desert' period. You need it to develop your personal projects or start a side business.
The best way to hurt yourself is to spend every single dime of your earnings.
Budgeting is a good way to take charge of your personal finances. It controls your urge for irregular spending and grants you the desired absence from the debtors’ club.
Do you budget? What are your thoughts on personal finance? Share in the comment box below.