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If you’re reading this article, you’re probably interested in searching for ways to manage your finances. The best way to do this is to develop a monthly budget and sticking 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 critical things I do every month, this has allowed me to consistently meet all expenditures, grow my savings, and reduce debt.

I normally plan my budget for the coming month towards the end of the month. This gives me a clearer view of my expenses in the coming month. It’s not a good idea to develop a budget after getting paid because, too often, that flush feeling of getting a paycheck results to nonessential and spontaneous 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. These are the things I must pay to keep a comfortable roof over my head and carry on earning money. I like to pad these essentials to create “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 needed. For example, donations, credit card repayments and monthly sving deposits. Don’t get me wrong, some of these things are also necessary, but in case of emergency they can be excluded. By giving credit card companies the maximum instead of the minimum, I keep my credit score high and my debt low.

My budget does not include the cost of living such as food and entertainment. These expenses 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 overseeing my monthly budget has worked out very well over the long term as long as I honor it religiously.