Personal finances

Preparing a budget can be a very long and tedious process, but it has become a necessity for many households and businesses as well. Budgeting is an essential step to take if you intend to have financial safety and freedom. Some sacrifices have to be made, but the returns will be worth the sacrifices. Here are some of the most important factors to consider when budgeting.

What is your goal?

This is the first and most important question to ask yourself. Maybe you want a dream home or a dream car, or you just want to retire in comfort. Whatever the case, you need to have goals that you can measure. This will help you understand just how much you need to save which will, in turn, give you enough perspective to prepare a sensible budget


It is crucial for you to understand just how much you use every day or every month. Take a look at your expenses. These can be your rent, food or water and electricity bills. I would advise that you put your expenses in categories from the most important to the least important. Give priorities to the most important bills or the ones that are fixed then find out how you can cut down on the rest of your expenses.


An important factor to consider when you are making a budget is the amount of money that you make. When I talk about income, I mean the amount that you are completely sure you will make every month. This does not include bonuses or expectations on commissions that you will get at your job. Only work with what you get every month. Do not speculate much about future earnings. In case you end up getting these bonuses or commissions then, by all means, use them as saving to steer you closer to financial freedom but before you get them, never incorporate them into your budget.

Your spending patterns and habits

Take a look at how you spend your money. There are some things that you can do without that you spend so much money on every month that you are not even aware of. Understanding your spending will help you to create a budget that suits you. This is because you will have cut down on any unnecessary spending. If cutting down is still a problem then take a given percentage of your monthly income and dedicate it to savings then use the rest on expenses.