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How to start a budget

 Without a proper budget in place, it is difficult to work towards your financial goals (Shutterstock)

If you find yourself unable to account for your salary, bills and even small change, it is about time you took matters into your own hands.

Without a proper budget in place, it is difficult to work towards your financial goals.

And this is where a personal or household budget comes to effect. It will show you how much income comes in either from a salary or business profits and how much goes out in terms of rent, grocery shopping etc.

In simple words, a budget is a plan for every coin you make. It allows you to track your spending, save and plan for future investments.

To do so, you must be very honest about your total income and expenses. Working with accurate figures is of utmost importance to help you see the true picture of your financial status.

To help you grasp money management better, here are some ways you can start a budget.

Calculate your net income

This is the first step that has to be undertaken to determine exactly how much you take home. Subtract any deductions such as taxes to accurately reach the net income. If you have variable sources of making money say from consultancy, a freelance job, a business etc add that to your income.

Use your lowest earning figure as the baseline. For instance, if your lowest earning was Sh25,000 from a consultancy gig or business since you started operating, use that figure in the budget.

Calculate your total income minus necessary deductions to get the full picture of your monthly earnings.

List down monthly expenses

Whatever costs you have monthly list them down. Do not be tempted to leave out ‘small things’ like tips, unexpected takeout’s etc. You need to know exactly how much you spend to allow you to budget effectively.

You can cluster your expenses in accordance of importance. Fixed expenses like mortgage, rent, insurance, school fees, nanny etc. are mandatory and need to be factored in first. The second cluster of variable expenses can include things such as, grocery shopping, travel and so on.

The third cluster could be an emergency fund. It is wise to have funds in case of surprise expenses which we all know pop up every time somehow.

 A budget allows you to track your spending, save and plan for future investments (Shutterstock)
Calculate the balance

Deduct your expenses from your net income and act on it. If you’re expenses are more you have two choices. You can cut down your expenses or earn more. Life as it is, it is easier to cut down costs than to earn more.

If your expenses are less, you have a good start to a better future. This means you have more money to push towards other things.

In this case, consider the 50-30-20 rule. 50 goes to the needs, 30 goes to the wants and 20 goes towards savings, investments, loan payments etc.


Now that you know whether you have more or less to spend, a decision has to be made. Do the necessary and make any changes then layout a simple budget of your net income and expenses. What can be done away with do so. Do not spend more than you are earning or this beats the purpose of the budget.

And most importantly, stick to the budget.


If you have extra money on top congratulations you are amongst the few people who can afford to save. Look into any pending debts you can pay off slowly or save towards buying an asset, attaining higher education or a business venture.

Review your budget

Things don’t remain constant and, in this case, you must always check your expenses against your income. Due to unforeseeable circumstances such as retrenchment, losses, unfavorable taxes etc. you must make those adjustments to your budget.

Perhaps you have finished paying off the mortgage and now you have some extra money what next?

Always keep checking in to have the true picture of your financial situation.

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