Budgeting: making your money plan
Learn what a budget is, how needs, wants and savings fit together, and how to track a month of spending. Free, neutral education with illustrative examples.
Scene 1 of 8
Where did it go?
Money has a way of disappearing. Payday comes, and by the middle of the month you're asking, 'Where did it all go?' A budget answers that question before it happens. A budget is simply a plan for your money. Not a punishment. A plan.
Pausing on some devices restarts the current scene when you resume. Next and previous move one scene.
Read instead: full lesson text
Where did it go?
Money has a way of disappearing. Payday comes, and by the middle of the month you're asking, 'Where did it all go?' A budget answers that question before it happens. A budget is simply a plan for your money. Not a punishment. A plan.
Start with income
Start with what comes in. Your salary, your sales, the money your side business brings. If it changes every month, use your lowest month, so the plan still works in a bad month.
Needs, wants and savings
Now split it three ways. First, needs: rent, food, transport, school fees, light, data. Things you can't skip. Second, wants: eating out, new clothes, the weekend. Nice, but you can live without them for a while. Third, savings: money you pay to your future self.
50 / 30 / 20 — an example starting point
A simple starting point is fifty, thirty, twenty. Fifty percent for needs, thirty for wants, twenty for savings. If needs take more than half, that's normal for many of us. Shrink wants first, and still save something, even a little.
Example only — use your own numbers
Here's an example. Say you earn one hundred and fifty thousand naira a month, or two thousand cedis. Fifty percent is seventy-five thousand naira, or one thousand cedis, for needs. And so on. The numbers are just an example. Use yours.
Pay yourself first
Here's the trick that makes it work: pay yourself first. On payday, move your savings out before you spend anything else. What you don't see, you won't spend.
One month of tracking
For one month, write down everything you spend. Every transport fare, every snack.
Plan versus actual
At the end of the month, compare it to your plan. You'll be surprised where the money really goes. That's your first step. A plan, and one month of tracking.
Check what you learned
3 questions. Get all right to earn the lesson badge. You can try again as often as you like.
Go further on Afiwe
General education, not financial advice. Amounts shown in illustrations are examples only.