September is the time for a fresh start!
The holidays may already seem a long time ago, but the university year has only just started. Wasn’t it great to be able to switch off your alarm, spend time…
A budget is a financial plan that helps you to manage your personal income and expenses with the aim of ensuring that you’re living within your means and not overspending.
It’s a list of all your sources of income (wages, allowances, income from rental properties, etc.) and all your expenses (e.g. household, rent, loan payments, car payments, taxes, phone bills, childcare).
You can start off by writing it all down in a notebook or a spreadsheet on your computer, but there are also apps available for your smartphone.
Here are some arguments in favour of a budget:
it helps you control your spending habits and enables you to identify areas where you could , for example, reduce impulse buying.
it helps you achieve your financial goals: whether you want to save for a car or a house, repay your debts, or build a “rainy day” savings fund. Having visibility on your financial transactions will help you achieve these goals every month.
it helps you avoid getting into debt: without a budget, it is easy to spend too much and accumulate debt. A budget will help you to avoid spending more than you can afford.
it helps you plan for the future: a budget will help you plan for future expenses, e.g. holidays or renovation works. By setting some money aside each month, you can avoid going into debt to pay your projects.
it reduces financial stress: yes, having a budget can contribute to your well-being by reducing financial stress and anxiety, and improving your sleep 😀.
Whether you use a notebook or an app, or you record your payments in S-Net (MIA), it is important that you do it consistently and regularly.
Update your files at each month-end, note all your expenditure and adjust your spending whenever you identify shortcomings in your budget.
When thinking about your budget, it’s important to ask yourself plenty of personal questions, really think about your needs:
short, medium and long-term projects?
bucket list: do you want to do a round-the-world trip, take a sabbatical, move into your own house?
vision: if you look ahead, think about where you want to be in 5, 10 or 15 years’ time?
entertainment: do you like going shopping, going out with friends? Do you do any other hobbies, sports or expensive activities?
needs: are you someone who needs to follow every new trend or are you an aware consumer who thinks about sustainability and wants to reduce their environmental impact?
financial objectives: how much can you afford to save? ...per month, per year?
professional career: are you looking for good “work/life balance”, do you want to reduce your working hours?
Are you motivated to start planning your budget?
Changing our habits is not an easy thing to do. We are so used to following the same routine that we that we quickly fall back into the trap and forget our good resolutions.
But persevere - it takes 21 days to change a habit and 90 days to make a permanent change in your lifestyle.