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Step 1 – Determine your total monthly income
Step 2 – Set aside 10% of your total monthly income and put it in the bank and forget about it
Step 3 – Allot 32 days per month no matter what month it is and divide by 2 (This is for inflation purposes that way your budget will always include an extra day’s budget per 15 days which is the normal pay out for employed people) which will mean for every payout you alloted 16 days budget for yourself. You will then not have a reason for saying “oh sheesh, my budget didn’t reach the 15th of the month!”.
Step 4 – Determine your needs
- Transportation – because you need to get to work to get paid for the day
- Food – Because you need fuel for your number one investment, your body
- Hygiene – Of course this is part of taking care of your body
- Clothing – this should be in wants, but it is a necessity to be dressed up for work right?
- Communication – this can be put into Utilities as well if you are on a monthly plan
Determine your Utilities – these are the things you pay on a monthly basis (phone bill, electricity, rent, etcetera)
Step 5 – From your Needs and Utilities add all that up and that will be your monthly budget, all the rest become your Wants now
Wants – anything you want to do with the rest of your money
Here’s how it works:
let’s say you earn 20K (This is just an example)
Monthly income divided by 2 – 20,000.00 divided by 2 is 10,000.00
10% which goes to the bank is 1,000.00
Money in hand for 16 days = 9,000.00
Needs
Transportation – 100.00 per day x 16 days = 1600
Food – 100.00 per day x 16 days = 1600
Hygiene – 500.00 good for 16 days = 500
Clothing – 1000.00 for 16 days = 1000
Communications 1000.00 for 16 days = 1000
Total needs equals = 5,700
Utilities (half of monthly bill
rent = 1250
water = 100
electricity = 500
Total Utilities for 1st half of month = 1,850
Add the Needs and Utilities = 7,550
Subtract this total from cash on hand = 9,000.00 – 7,550.00 = 1,350.00
Wants = 1,350.00
*** Now if you have any money left from the 16 day budget for Needs and Utilities, you can choose to add it to your Wants or add it to your savings.***
This is your basic computation for each half of the month. You can make adjustments here and there but if you stick to this plan you won’t be in trouble of not reaching the next payout.
Now if you think this isn’t much…. then you probably aren’t earning as much as you need. So find a way to make you earnings multiply and reach the comfortable level that you want to be in.
Just remember to:
1. Save 10% of your total earnings
2. Properly budget your Needs and Utilities per 16 days (15 + 1)
3. Enjoy what is left of your money on Wants
I have heard of people saving up 50% of their monthly income but that just defeats the purpose of having money… now unless you intend to invest that and that is the reason why you are sacrificing too much go ahead… but there will come a day that you will splurge because you did not indulge yourself with your monthly wants. I’m not saying it’s bad to save up more than 10% it’s just that you’re not enjoying your money anymore which will lead to unnecessary stress that may then result to overspending.
Tell me if this works for you 
chipesterkhan@gmail.com
