Dear readers, thank you for reading the previous post on savings. A little recap shows that:
- The golden rule is to save at least 10% of any income received by you
- Savings come with a lot of self-discipline
- In life, it’s not how much you make; it’s how much you can keep
If you are to save 10% of any income given to you, how are you going to manage the remaining 90% or 80% (for Christians who give a10% tithe to God)? Well we would be using the most accountable tool- BUDGETING. We hear of it here and there but how much of it do we have in our finances. A budget is an itemized summary of intended expenditure, usually coupled with expected revenue. It is important that to become financially literate, you must learn to control your expenditure by budgeting.
George S. Clason in his book The Richest Man in Babylon said “Your income may not gratify your desires, only spend on the necessities which should not take more than nine-tenth of your income”. In other words, budget all your necessities you need for a period within the limits of the income receivable by you. When budgeting, itemize your needs in order of priority. Allocate funds to the needs in that same order. Note that, when preparing a budget, it is wise to provide a sum of money to meet any contingencies. In this way you would not be hooked up on your budget.
Budgeting helps you avoid all unnecessary spending. Also, it helps you account for the way you have spent the income you’ve received. Trust me, if you can’t account for your income now, there is a doubt you would be able to manage a fat income because the more you have, the more you spend right to the limits of your income.
You are a step ahead when you can live on less than you can earn. HAPPY BUDGETING!
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Originally posted on March 9th 2016 on www.thefinancialliterate.wordpress.com (A previous version of The Financial Literate Blog)