Budget Your Way Through 2021

Lights shine in the sky, feast on the table, and different versions of “Auld Lang Syne” plays. Everyone looks out for the new year for a fresh start. Everyone gets ready not just to jump and hope to gain more inches in height, but also gets ready to list down their new year’s resolution. And if you are like me who includes budgeting and saving money in your new year’s resolution, you know that it’s easier to list it than done.

Planning, budgeting, and actually following a cash flow plan is not fun for everyone. However, isn’t it rewarding to get to treat yourself once in a while, travel, and not worry about credit card bills and debt?

The key is to dump the spending before your salary even lands on your account. In short, cut off debts. Only spend what you earn, or better yet, only spend half of your earnings. Most of us get carried away by the idea of swiping our credit cards all the way and just having to pay it whenever you get your salary or just slowly pay off remaining debts. However, it only causes exhaustion not only to your account but also to you. Do you wanna work and live just to pay off your debts? I would assume no.

So how do you actually start budgeting? Make a list. As basic as it can get, you will have to list down every cent you earn and spend. You can’t just have everything in your head, because I will guarantee you will get to a point where you will question yourself “where did all my money go?”, and you are left cashless and clueless at the same time.

Second, on that very list, leave off 50% or 20% off your salary (depending on your needs) on purpose. Meaning, make it look like you are only earning 50% or 80% of your salary, and so that makes you think you are only allowed to spend that percentage of your earnings. That percentage deducted will go straight to your savings. This may seem ridiculous or hard at first, but you will thank me later when you look at your savings account ready for your future plans.

Third, don’t be an aggressive buyer. This will save you not only from spending too much but from clutter. Sometimes, buying is driven by emotions. And so before you buy something (especially expensive things), make sure you’ve thought of it. I always follow a rule, when buying a “want”, to leave one day to decide whether to buy it or not. If I go home, and still think about that “want” even before I sleep, that means it’s really something I want.

Budgeting may seem intimidating and complicated at first, but once you get the hang of it, you’ll adopt it as a habit. And it is vital to make budgeting a habit, and not spending. Sometimes, we overlook budgeting and keep everything in our head, and that's when we start overspending and having piles of debts. This new year could be the year you will be able to save a lot or will start saving money. Make this year the start of your budgeting journey, and not just a new year’s resolution listed in some random paper.

Reference: How to budget in the new year