When one receives money, be it a paycheck or a gift, he/she is usually overwhelmed with joy and starts thinking of ways to spend it, often overlooking the fact that there is something more important that this money is needed for, or to save for a rainy day.

Financial experts advise that one should have 3 to 6 months of your take-home pay set aside as your emergency fund.  This emergency fund could be for those rainy days’ events, like an electrical appliance broke down and urgently need to be replaced, a family member becomes ill, or loss of employment.  3 to 6 months’ of  your take-home pay sounds like an impossible task, especially for the young working person like me.  However, it is always good to start, and what better way then to do it monthly, starting with your pay check? A budget is then needed for you to help establish your spending and saving patterns.  Soon, you will start to see your nest egg building up, and when you have build up your emergency fund, you can start to think about investing and even retirement.

How should one budget then for the monthly expense? This will have to depend on yourself.  How often do you eat outside, the costs of your hobbies, the distance from your home to your workplace, the gas and mileage required, the rates of utilities at your state, how much insurance you and your house need etc.  All these are factors to bear in mind.  Be realistic in planning your budget.   The best gauge will be that you have recorded your expenses faithfully for the last 3 months, and will be able to use it as a reference in planning your budget.  However, if you have not started to record your expenses, do not use it as an excuse not to budget.  You can still attempt to budget realistically, bearing in mind of course, that you might over-budget or under-budget for some items.  Record your expenses at the same time during the month, so that you will know how to readjust the figures when you budget for the next month.

 A rough estimate for a monthly budget is found below.  Feel free to adjust it according to your own needs.

Savings                  - 5% to 10%
Tithes/Donations      – 5% to 10%
Food(away)             -  6% to 10%
Transport                          -  10%
Clothing & Cosmetics            - 5%
Gifts                                  - 0% to 5%
Entertainment                    - 0% to 5%
Medical                             - 0% to 5%
Insurance(personal & house)- 7% to 10%
Groceries                         - 5% to 7%
Household Utilities               - 10%
Taxes                               -15% to 20%
Household Goods                  - 0% to 5%
Miscellanous                        - 0% to 1%
 

Add any categories that might be relevant to you.  Make sure what you have budgeted for adds up to 100%.  Please do not be disheartened if you do not meet your budget at your first attempt.  Sometimes, it might have been we have overlooked an important occasion, like we need to budget more in the gifts section for a coming wedding, or Christmas.  These are important things to note when budgeting.  When planning for the coming month’s budget, take a look at your date book.  You might find things that you need to budget for like for the special occasion or a trip.

Readjust your budget for the next month.  You might have over-estimated for some and under-estimated for some.  However, in the course of doing so, do see if there are any categories which you might cut down on.  For example, your food(away) might have been extremely high, because you have been feeling lazy and been calling for pizza delivery or chinese take-outs quite a number of times in the month.  See how you can counter the problem.  You might choose to eat at a cheaper outlet or prepare meals in advance and in larger portions when you are feeling more energised and freeze them.  For those lazy days, you can just take them out of the freezer and microwave them.  This might reduce your spending for food(away).

Budgeting and saving money is not an easy task, but it is definitely not an impossible task.  Take a tiny step today, record your expenses faithfully daily, and then progress on to the next tiny step of budgeting.  It might be much easier than you have expected.

Happy Budgeting!
 

Copyright © 2000 Christine Ng
No part of the article may be reproduced without prior permission of the author
 

About the author :
Christine Ng is the Editor and owner of Ladies Connect, a website and ezine especially for the busy women of the 20th Century. It is a Christian website and offers web resources to women in finance, health, spiritual matters, organisation, lifestyle and other useful resources.
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