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How To Crush Your Budget

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How To Crush Your Budget

Financial planning is evaluating your current financial status, where you are, and where you want to be.

Financial Planning gives you control of your income, expenses and investments. It involves identifying your goals, creating a budget based on them, and investing as directed by your financial goals.

Let’s talk about how values affect your budget and spending plan.

Research shows that millennials and Gen Z spend their money on the top four things: housing, transport

(cars, Uber, taxis), eating out, and gadgets. What would you say you spend most of your money on? If you continue with that spending trend and pattern, will you be able to reach your financial goal?

For example, you plan to retire in the next 25 years and have decided to save KES 15,000 per month towards that goal. However, you spend the same amount on transport and eating out monthly. Are you willing to let your retirement goal lag and suffer because you have placed a higher value on eating out and convenience? This assessment will help you bring a balance to your spending.
Other tips to help you stick to your budget are:

✅ Refer to it as a spending plan instead of a budget. A budget tends to feel restrictive.

✅ Be flexible. Budgets change, and you need to be able to adjust and make changes as circumstances change.

✅ Be realistic. Expense tracking helps you know the actual situation on the ground, thus allowing you to be more realistic

✅ Have financial goals. Financial goals help you focus. Knowing what you are working towards enables you to be disciplined

✅ Keep records. Have a visual image of how your expenses are coming in and going out.

✅ Pay Cash: This helps you wire your brain that you are actually spending money. You will be more conscious that money is going out.

✅ Shop with a list. If you don’t have one, you will end up spending carelessly.

Is it possible to create a budget on a small or fluctuating income? Yes! These tips can help you achieve just that:

✅ Be friends with your calendar.

✅ Know your monthly average income.

✅ Know your baseline (bare-bones budget.)

✅ Increase your income.

✅ Pay yourself a salary for a fluctuating income.

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Financial Goals: How to create a plan for your money

by with No Comment program
Financial Goals:

How to create a plan for your money.

Here is a mindshet shift you didn’t know you needed. Set your financial goals based on what your values are.

Understanding your values can help steward finances in ways that uphold them. A value system guides you through every day, every task, and every encounter with other human beings and can help you cut spending on things you don’t care about.

For example, if family is one of your core values, you might spend less on going out with friends and more on quality time with your loved ones doing your best to see that they have what they need.

Your financial goals directly reflect your personal values; therefore, you must first know your values to set practical financial goals. Ideally, money should fund your values. You have to ask yourself, “What are the important things that money can give me in my life?”, “Why do I do what I do?” “What are my core values?” This is an important place to start when setting financial goals.

One of the consequences of not going through the process of identifying your values is that you are most likely to give up along the way when your financial goal becomes hard to attain.

Values keep us headed in the desired direction and are distinct from goals. Goals are the ways you intend to execute your values.
Now that we understand the role of our values in setting financial goals let's dig into how you can quickly identify your values. Here are a few questions to as to help you figure this out.
"Who do I admire?"
"What inspires you to take action?"
"When do you feel most like yourself? "

Once you identify a value, find out the specific actions and activities you need to do to achieve this value. For instance, actioning the value you place on family members might involve money, and some of these actions might need to be done regularly, like every week or every month. Such expenses can be viewed as budget expenses.

However, the actions that will take 3-10 years to accomplish will become your financial goals.

More often than not, you will discover that living out your value will have severe financial implications. For example, the desire to pursue your purpose in life might require you to leave a well-paying job. Therefore, you need to set aggresive financial goals that will empower you to leave your job and pursue your desire comfortably

 

what should you consider when setting your financial goals?

Your inspiration and situation are a good place to start. You want to ensure you are realistic and not getting carried away with the fear of missing out (FOMO). Remember that your financial journey and realities differ entirely from your colleagues, friends and family members. Another thing to consider is categorizing your financial goal into short-term, long-term, and mid-term. Long-term financial goals can wary you down because of the timeframe. Have a good mix to keep you well motivated.

Finally, write down your goals using the SMART method.

Specific: What do you want to achieve? Who needs to be included? How much will it cost?
Measurable: How do I measure progress? How do I know I have successfully met my goal?
Achievable: Do I have the skills required to achieve this goal? If not, can I obtain them? What do I need to learn? What challenges will keep me from achieving my goal?
Relevant: Why is this a goal? Why I'm I setting it now? Which value is it aligned to?
Timely: What is the deadline, and is it realistic?