Initially this can be difficult when a budget is seen as a negative imposition on our lifestyle. But this needn’t be the case and the reality is when a budget is done properly it actually equals fun and freedom. The trick is to make your budget, your friend and this can be achieved by understanding that the essence of budgeting is to provide you with a targeted road map and a proactive plan for your finances.

A budget is also meant to make your life fuller and richer, not more restrictive. So I’m not suggesting that you should live a dull life where you can never go out, eat takeaway, or see a movie. In fact, saving and budgeting smartly will allow you to make the best use of what you have and live a happier, more fulfilling life. Better still, even when living on a budget, you are allowed to spend money…you just need to do it wisely!

A budget can be as simple as:

• As a rule of thumb, save 10% of everything you earn and pay yourself first. A great way to save is to have your savings taken straight out of your pay packet by automatic deduction. Saving 10% is a good starting point.
• Look honestly at your current spending habits on non-essential consumption items such as eating out, takeaways, alcohol, cigarettes and clothes. Ask yourself, “Can I really afford to spend my money on these items if I wish to buy my first home?” Consider cutting down on or even stop spending in these areas whilst you are saving. You will be amazed at how much you can immediately put towards your home deposit by doing this.
• Assess your total annual household expenses and regularly allocate funds to cover these into a dedicated account. This way there is always enough cash available to pay for your costs of living and you won’t be spending this money on non-essentials.
• Work out a budget for your weekly grocery and food shopping, and stick to it.
• When going out with friends and planning social meet ups, consider attending free events and using free public facilities and venues.
• When it comes to buying family and friends gifts and birthday presents, agree on a set spend amount for these items and don’t be tempted to go over this price point.
• Set aside regular amounts into a holiday, travel or special event account so you can pay for these with cash rather than putting them on your credit card. Also create a separate account for seasonal expenses and unexpected emergencies so you are never left short of funds.
• Have a plan to eliminate debt which means it’s a good idea to invest at least 10% of all you make in reducing your debt.
• Only use credit cards if you can pay the balance in full each month.