Like all other journeys in life, your journey to financial freedom cannot and should not be left to chance. Proper, deliberate planning is essential. This is where budgeting and coming up with a budget comes to play. A budget details your total income; with its various sources, and expenses, being subdivided into fixed and discretionary expenses. Next is the allocation of resources to the various expense heads that you have identified. Do note that this is only a projection, and it is not expected to be accurate to the last kobo. With time, necessary updates can be made to your estimates and your estimates would be close to the actual values.
Someone may ask: How should my income be divided among the various expense heads? First, it is strongly suggested you come up with a personal revenue allocation formula. Our next post will discuss the 50/20/30 rule of revenue allocation. Which you can compare with your personal allocations and make any changes where needed.
Be Financially Literate!