Mkwanja Kiduchu: A Note on Personal Budgeting
Disclaimer: I’m no expert in this kinda stuff. This is completely based on personal experience — based on a true-story [winks] — as I was going through a transformation from academic to professional career.
The Trigger
It all started a year ago when I was just fresh from college, secured my first job as a full-time Software Developer, starting to earn a monthly salary. And what do you do when you receive your first paycheck? Turn up... Not! A smart move is to pay attention to budgeting. Your personal budgeting.
As a college graduate, drawing up a budget was a challenge. Next-to-impossible level challenge. This was contributed by a number of factors including being new to the city (Dar es Salaam) for my first full-time job. I knew there were a number of obvious things that I would need everyday, but I couldn’t tell how much they would cost, let alone other costs that I was yet to find out. Costs of living were through the roof in the city and I couldn’t stress enough about managing money. You feel me? I’m trying to paint a picture here.
Long story short, not knowing how much you would need to survive a month is a nightmare. To finesse the situation, I decided to do the following.
The Finesse
- Keeping record of every transaction: Yes “every. single. transaction.”. Every shilling (Shilingi ya Nyerere) coming in and where it’s coming from, every shilling going out and what it was spent on, along with the date of each transaction. Use any recording method that works for you, whether it is a hand-written book (daftari), an excel sheet, or an app. To simplify life a bit, categorize your transaction in the likes of food, internet, transportation, rent, loan, paycheck, and such. I know, you are wondering why going all boost-mode, right? Hang in there, you’ll understand in a mo. For now keep keeping records (keep keeping haha) for at least 3 months then… the second point.
- Drawing insight: For anyone who has at least heard of Data Science, it’s clear that it involves data — BIG data! Data is a fancy term for collection of information consisting of facts and stats. To make a prediction (decision), you need insight. And to draw insight, you need data to draw it from. The more data at hand, the better the insight, which in turn leads to a better decision (i.e. more precise prediction). As an answer to the point above — Why boost mode? — recording your every transaction will give you the ability to go back in time and get answers to the questions: What are your main sources of income?, How much do you earn?, Where do you spend most and least of it?, What are the recurring costs and how often do they occur?, and other important questions needed to accurately draw a budget.
- Redefining the necessaries: This is the list of things you really need a.k.a. things you can’t live without. The essentials. The necessities. You know? These differ from person to person depending on occupation, location, and — more importantly — lifestyle. The bottom line is, as you’ve figured out your income and expenditures (since you have the insight), now do your best to identify the things you need in order to survive as a human being and work as a professional. Those are the necessaries.
- Cutting down (unnecessary) expenditures: A bit similar from the previous point, but this focuses more on the things you can live without. Going through your records, as you have already defined the necessaries, now identify all expenditures that didn’t make the list. On the second list of unnecessaries, cut down the things that seem a bit extra. These (the ones you cut) will not be included on your next budget. Just don’t be a party-pooper and kill all the fun, alright? Live, work, relax, and have a good time.
- Recognizing every purchase as an investment: Is this article about budgeting? I thought it was. Yes, it still is. Well, on that note, it’s important to also talk about investments as they are one of many reasons you might spend your money with the promise of giving you profit later. Investment is something worth buying because it may be profitable or useful in the future [Oxford Dictionary]. When buying a product (esp. tools), evaluate and analyze ROI. The value (utility, usefulness) of a product purchased should justify its price.
- Researching: There’s always something to learn. So before spending money on anything, dedicate your mind and time on finding the truth about the viable options. Kinda like a literature review. And when it comes to purchasing a tool — say a laptop, phone, camera, TV set, car, game unit, fridge, hair conditioner — reviews are the best thing to help you out. Amazing human beings, famously dubbed creators, are dedicating their time to make contents about products. There’s at least a review for almost every product on earth right now. So it’s often fruitful to check them out. Little asterisk: “Don’t pay attention to the brand influencers. They can do jack-sh*t because of influenza” ~ Kiernan Jarryd.
- Work hard, play hard: Yep!
The Outro
In the end, almost everybody wishes to bag more money. Since it has proven to be not as easy, maybe we should — actually we can — try to lower our expenditures (as we keep working hard and making bread, of course).
Anyhoo… They say “more money, more problems”, however, keeping records of these roots of evil can be a whole lot helpful in reducing the very same problems caused by them. In any situation, I’m neither saying the technique I put in place is the right way nor the wrong way. All I’m saying is it would be great if this helps someone out there. Whether you are fresh from college, you are looking for a way to improve your budgeting, or you are just one of the people who always wonder — in the middle of a month — where did all the money go! Take what you take from my experience, keep learning, keep growing.
Amani.
