Personal budget

Budgets are important tools in ensuring that spend does not go beyond what is available (income/revenue). Time and again, you may have heard the importance of budgets reiterated in different settings. Most adults know that having a budget is important. However, very few actually have a personal budget, and even less stick to it if they do have one. In some circumstances, having a budget is not just necessary but highly recommended.

For instance, if you are working towards debt settlement, you need to ensure you are spending with discipline. You also need to analyze your expenditure and determine what you can do away with. This will leave you with some extra cash that you can channel towards paying off your debt. Here are some things you can do to determine what to cut back in your budget.


Take time to sit down and list down where your money goes every month and year. How much do you spend on food? How much do you spend on housing and utilities? How much do you spend on entertainment? This is why it is important to keep all the invoices and payment receipts showing your spending close, because they will come in handy when you have to consolidate your spend. After doing this, compare with what financial experts recommend. For instance, clothing should cost you just 5 percent of your income. If you are spending more than that, you are setting yourself up for trouble. If you cannot trace where your money goes, you are in even more trouble and might need to consult a financial advisor.

Sorting the Needs from the Wants

Your next step to cutting back on your budget is determining which are those things that you must have and which ones are the things that you desire to have, but aren’t strictly necessary. A magazine subscription for instance might be nice to have, but not really necessary. Put everything you spend on because you like and not because you need it under a category that you shall refer to as ‘greatest desires’. For this, you need to have an honest conversation with someone you trust. Having undergone a credit counselling session will probably help you have a clear perspective for this


You now have a clear picture of what you have been spending versus what you should be spending. You also have a list showing what you require in your life as must-haves and what you would like to have but can do without. It is important to first eliminate your ‘greatest desires’ from your life until such a time when you have stabilized your resources.

Now, armed with this lean budget that does not contain unnecessary items to spend on, your next step is to adopt the right attitude. You need to be committed to sticking to your budget no matter what. It will not be easy, especially if you are used to spending on whatever you want at whatever time but it will definitely be worth it. After seeing all the savings you will have and the progress you will make towards settling any debt that you might have you will wish you had cut back on your budget sooner!