If you are reading this, you are most likely having slight financial stress and looking for a way to gain control of your finances. The best way to do this is to create a monthly budget and committing to it. A sound budget is a fundamental tool for managing money, one that has allowed me to get on with my day to day life even on limited funds. Managing my monthly budget is one of the most crucial things I do every month, this has allowed me to consistently meet all expenses, grow my savings, and control debt.

I usually plan my budget for the coming month close to the end of the month. That gives me a heads up about what’s down the road. It’s not a good idea to develop a budget after getting paid because, too often, that flush feeling of getting a paycheck leads to uneccessary and impulsive spending before the paycheck ever reaches the bank.

Start your personal budget by outlining all the things that must be paid that month like rent, electricity bills, insurance policies, loan repayments and telephone bills. The general idea is to allocate a budget for the things that I must pay to keep a comfortable roof over my head and carry on earning money. I like to pad these necessities to make “money back” after paying the bills and, if costs increase unexpectedly, I’m always covered.

Next, my budget is subjected to a list of discretionary things I need to cover but could live without if absolutely necessary. An example are monthly savings deposits, credit card repayments and donations. Don’t get me wrong, some of these things are also important, but in case of emergency they can be excluded. By paying credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.

My budget will not include the cost of living such as food and entertainment. These things get covered by what’s left over and that’s that. Some months involve lots of beans and rice, slow-cooker meals, free or cheap entertainment, and only one inexpensive piece of clothing . This strategy of managing my monthly budget has worked out very well over the long term as long as I observe it religiously.