1. Thou shalt know thy financial goals and set your budget around it.
2.Thou shalt know thy income.
That is the total amount of money you receive from investments (passive income) or from employment and business (active income).
3. Thou shalt know thy expenditure.
Differentiate your needs from wants.Some are regular, some vary from month to month yet others may be one off expenses.Categorize them into things like food, entertainment, health, transport, school fees, mortgage or construction expenses, insurance, investments etc.
4. Thou shalt know thy time periods.
Budget for the long haul and also for short periods of time.
5. Thou shalt have a diversified emergency fund.
This could be in the form of cash or easily liquidated investments e.g. shares to cushion your living expenses for six months in case of unforeseen circumstances. Do not put all your emergency funds in one basket but instead spread them out in different tools and institutions.
6. Thou shalt involve different stakeholders in your budget.
This could be close family members or partners that have a stake in your income and expenditure.
7. Thou shalt be frugal with thy expenditure.
8. Thou shalt make provision for additional sources of income.
9. Thou shalt slowly make adjustments of your expenditure along the way so that you do not set yourself up for failure by reducing the fun in your life.
For example if you have been going for drinks with your friends after work thrice a week you can reduce to once a week instead of stopping abruptly all together and taper it down to twice a month say eventually.
10. Thou shalt use whatever budgeting tool works for you, it could be paper based or digital.
Don’t forget to review and revise thy budget from time to time.
On a lighter note, thou shalt have a brighter financial future. A happy Sunday and a great new week to all the readers of this article !
‘Wacha niKwambie Uzima’
April 2016 -#Iwillbeontopofmymoney!
The writer of this article is a senior business advisor in a health NGO that provides financial capacity and technical advisory services to clientele in the Kenyan health sector. She is also a proud alumna of the University of Nairobi, School of Business, MBA program in Kenya, East Africa.
Images – Google Images