– By Yusun Ingoshi
With finances, planning is key. Creating a budget and putting time and energy into planning out money management isn’t only important for organization – it also encourages mindfulness and self-reflection in the moments when you’re about to spend your money.
Here, I’ll share the story of how one chalkboard quote has shaped my budgeting habits, with tips on how you can create a simple and straightforward plan based on your income and expenses.
“Failing to plan is planning to fail.”—Alan Lakein
For me, it all began during my primary school years. I had a teacher who never failed to teach us a famous quote before he started his lessons. He would walk in silently, leave his books on the teaching stand, and proceed to write out the day’s quote on the board. At the end of class, he would conclude by connecting his lesson to the quote and ask us to read the quote out loud.
It was fascinating the way we all took this act seriously – and how it has affected me ever since. Alan Lakein’s quote is something I have taken to heart and practiced in many avenues of my life, from university exams and job applications to my finances.
Following a set plan ensures that I save time accomplishing scheduled tasks and it also allows me to be more flexible with my time and money. Even though I am at times spontaneous, I have realized that it becomes easier to bounce back to normalcy because of my budgeting and planning habits.
- Start with your income
Begin by getting to grips with how much you earn per month and the payment consistency. Most jobs pay either bi-weekly or monthly. If you receive allowances, it can help to ask your parent or guardian stick to a particular schedule. You can schedule your bill payments to come out directly after you receive your regular income.
Start by keeping a record of your earnings in a ledger book, budgeting app, allowance app, or spreadsheet. Physically inputting these figures keeps you financially alert of how much you make and reassures your spending.
- Calculate your expenses
Track your expenses consistently for at least three months to gauge your financial output. You can either keep all the receipts or cross check with your bank and credit card after each purchase. Record your expenses by the end of the day to make sure you don’t fall too far behind with your tracking.
Track everything from your regular pre-authorized payments to impulse purchases and total them at the end of the month. Once you have a clear record of these, budgeting becomes much easier as you are aware of fixed payments and miscellaneous spending.
- Tailor your budget
Once you have a firm understanding of your income and expenses, you’ll be able to see whether you’re living in a surplus or deficit. Having a surplus means your income is greater than your expenses, and having a deficit means you’re spending more than your income.
When you refer back to your tracking, you’ll immediately be aware of the places where you’re spending too much money, or areas where you can perhaps afford to spend a bit more. From here, you can plan to cut down or distribute more across key categories in your life.
Building smart budgeting habits
When creating your budget, consistency is key. Sometimes it can be frustrating or uncomfortable to constantly log and track your spending, but it’ll help you make better financial decisions in the long run.
Ask your parents to teach you how they handle the household budget. As well as gaining valuable insight, you might instill confidence within them that you are able to manage more money as you’re actively interested in better handling your finances.
Keeping a closer eye on your finances also can help you to:
- Spot mistakes and overcharges on your debit or credit card
- Correct errors before they gain interest
- Pay less in late fees, interest, and penalties because you stick to scheduled payments
So – say it with me: failing to plan is planning to fail. Once you have a solid plan, you’ll find that
budgeting can give you room for financial freedom, helping you to see how much flexibility you have based on your spending habits.
More so, learning how to deal with money, no matter how small the amount, is the foundation to a solid sense of financial security.
Consistency is key. With finances, budgeting should be your foundation. Learn which 3 key aspects you need to know in order to plan a budget that works.
* Yusun Ingoshi is a Montreal-based writer, poet, and freelance editor currently completing a Bachelor of Arts in English Literature with a Minor in Professional Writing at Concordia University. Her writing fights to reconstruct the tenets she believes in and stand as a representation of the woman she is evolving to be.