Tips For Effective Budgeting

When it comes to managing your personal finances, budgeting is one of the important habits you must develop. Fortunately budgeting is simple yet effective. Here are some tips that can help you manage your finances better, and make some extra money while at it!

• Create a list of all your monthly income values and sources
• Create a list of all your monthly expenses
• Determine if your income covers all your expenses – and it barely does, adjust your expenses to free your money which you can use for education expenses, holidays, gadgets etc.
• Add new categories apart from the basic needs most people look after (food, clothing, shelter) such as emergency fund for a rainy day.
• Debt reduction fund to finish off paying loans in advance thus reducing interest to be incurred
• Retirement savings or pension plan.
• Invest your extra savings. If you have extra savings, do not let your funds lie idle in a bank account. Invest in low risk unit trust funds such as money market or wealth management accounts that can earn you between 8 – 11% interest per annum. You can use the extra earnings to buy a new gadget, insurance policy, top up on school fees or even use to pay off a loan in a shorter repayment period.