Do you have a budget? Is it designed to help you grow?

A budget is your quantitative plan. It is a collection of the things you want to spend money on and where the money is going to come from. It is a simply a collection of your future revenues and expenditures.

Having a budget is an indication of an intention to avoid running into financial distress and focus on financial growth. Growth is a product of a good budget. What is a good personal budget?

This is how a good personal budget should look like;

A. Income: It must show your expected annual income. The annual income should be broken down to a monthly income by dividing the annual income by 12 months. And the monthly income further broken down to a weekly income by dividing each monthly income by 4 weeks.

Your income is your is your net revenue. That is, it is what is left of your revenue after taxes, interests and all other deductibles are removed.

B. Allocation of your weekly income. It is very important to always allocate your weekly income among your basic needs and set aside a portion as your weekly saving.

For instance, you may allocate your weekly income to the following needs and saving with their corresponding percentages;

1. Shelter- Accomodation- 20%

2. Food – 20%

3. Clothing – 5%

4, Communications- 5%

5. Continuous Learning- 20%

6. Savings– 30%

At this point, it is important to remind you that this is a personal budget that is focused on personal financial growth. This is the reason learning and savings take 50%. Of the budget.

The next important item that must make a good personal budget is how you intend to allocate your saving.

C. Allocation of savings. You may;

1. Invest 30% of your savings.

60% of which may be in ventures with a short term returns on investment (within 12 months) and 40% of the 30% set aside for investment may be invested in ventures with long term returns (more than 12 months).

2. Set aside 30% of your savings towards getting a personal home. Remember, your saving is a portion of your weekly income not spent. So the 30% saved towards a personal home is accumulated over time till it could buy a personal home. Or, till it could be used as a counter fund to buy a personal home.

3. Set aside 25% of your savings towards other things like a car and house stuff.

4. Reinvest 15% of your savings. This is absolutely important in order to maintain and progressively enlarge the cycle of growth.

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