The reality is, a budget is something that tells you how to allocate your resources and it should reflect what you value.
So if I looked at your bank statement, would it reflect that you are spending on the things you love, or would it be a reflection of the fact that you don't spend intentionally and allow your money to be pulled in different directions?
The reason most people live paycheque to paycheque is that they don't have a full understanding of what their income can support. Money in the bank is equal to spending. It doesn't matter whether you earn ten thousand or ten million nairas a month, your resources are limited and consumption tends to rise with income, so it's important to have a spending plan that takes that into consideration.
So here is the trick for guilt-free spending: the smart money budget! I know the idea of a budget makes most people nervous, but it shouldn't, especially if it's easy and reflects the things you love.
The smart money budget is a way of allocating your resources. First, divide your income into three parts:
• Long-term financial goals
• Short-term financial goals
• Living expenses
Long-term financial goals (LFG):
At a minimum of twenty percent of your income, it represents a proportion set aside towards improving your net worth, i.e. buying assets that will provide you with an income. Good examples are towards purchases like land, property, or a stock portfolio.
Short-term financial goals (SFG):
The proportion of your income set aside for treats — a Chanel bag, an iPhone, or a luxury holiday; whatever tickles your fancy.
Living expenses:
Your monthly contribution to your rent, health insurance, cable/satellite television, petrol, service charge, etc.
Source - The Smart Money Woman Book ( Click here to download)
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