You want to go grocery shopping and boom, gas finishes too. There is NEPA bill to be paid and you have to buy data so that you don’t lag on your online courses. There is no end to the list of bills you have to pay as an adult. Adulthood isn’t so much fun, afterall, because even the things you do for fun involve spending money. Paying bills in adulthood is choking and can make you wonder if our parents paid the same bills as we do now.

Truth be told, our parents also paid their fair share of bills. Their discipline helped them find a balance. Managing your budget and paying your bills conveniently isn’t hard if you’re disciplined.

What Is Budgeting?

Budgeting is simply the process of creating a plan to spend your money. Creating a budget lets you know what you can afford to spend. Moreover, you can prioritize the things that matter the most. Budgeting allows you to balance your income with your expenses. Spending more than you earn is a real thing and you can gradually walk that path when you don’t track your money.

The 50–30–20 Rule Of Budgeting

The 50–30–20 rule of budgeting was presented by Senator Elizabeth Warren, a Harvard law professor, and her daughter, Amelia Warren Tyagi. This guideline lets you allocate your income into 3 broad categories: Needs, Wants, and Financial Goals.

50% of your income caters to your needs. Your needs are the things that you can’t do without. They are necessities like rent, groceries, utilities like electricity bills, water bills etc.

30% of your income caters to your wants. Wants are good to have but not necessary for survival. They are desirable, but you can get by without them. Wants can include vacations, eating out, gym memberships, and entertainment like your beloved Netflix subscription.

20% of your income caters to your financial goals. This covers your savings, investments, and debt repayments.

Why You Should Have A Budget

  1. Budgeting helps you focus on your financial goals. When you allocate your income to include your financial goals, you are able to actualize these goals and also create the life you want finance-wise.
  2. Controls impulse spending. If you struggle with overspending, budgeting can keep you in check. Oftentimes, when you don’t plan your income, you have this false notion that you have more than enough money at your disposal leading to overspending.
  3. To stay ahead of emergencies. Let’s face it, life happens, even to the best of us. You don’t want to start going about asking for urgent 2k because you failed to plan your money. An emergency fund could even be a part of your budget.
  4. Your retired self will thank you. A retirement plan doesn’t spring out of nowhere. It’s a product of intentional efforts. The efforts that you put into planning and setting money aside today will impact your retirement plan.

While the 50–30–20 rule is a great place to start with budgeting, it isn’t set in stone. You can adjust it to suit your circumstances and lifestyle. For example, if you are trying to save for a home, what you allocate to your financial goals will most likely be more than 20%.

Simplify your budget even further. Schedule airtime and data on CashMore today.

Discover more about CashMore by visiting our website here. Connect with the coolest Fam on TwitterInstagramFacebook, Telegram, and YouTube for more amazing tips and updates. Feel free to send us an email at support@cashmore.ng

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