Living in the US, a consumption society, can be very expensive. The daily expenses (taxes, accommodation, utilities and many more) could put a lot of stress on your finances. As a result, we may find ourselves living paycheck-to-paycheck, with little to no money left to save. Many African immigrants and students in the US are no exception to this lifestyle. If caution isn’t taken, one can end up racking up a lot of credit card debts, or being bankrupt while in the land of plenty.
Americans on a whole just aren’t great savers, to the point that almost 70% of them don’t even have $1,000 in the bank. Furthermore, almost half of Americans claim that to cover a $400 emergency, they’d need to borrow the money or sell something quickly to round up the cash. African immigrants in the US are experiencing the same financial struggles.
According to a recent study by a pool of U.S. Banks, only 41% of Americans use a budget even though it’s one of the most effective ways to keep track of our finances. This data is only a slight improvement over a 2013 poll, which showed that just 32% of U.S. households maintain budgets.
Why You Need a Budget
You may be wondering why you need a budget. Budgeting should be viewed as a means to an end. Budgeting and money management are a way to allow us to spend and save our money in the most productive and efficient way possible. Keeping tabs of our spending can be a very challenging task, especially if we’re living reasonably, but not aggressively, below our means. Think about all your monthly expenses. There’s housing, transportation, health care, utilities, entertainment, and food — and those are just the big ones. Some of us have several dozen spending categories to account for each month, from gym memberships to magazine subscriptions, and even those smaller expenses can really add up.
That’s why having a budget is crucial. Without one, you won’t know how much you’re spending, and you’ll have an even tougher time identifying opportunities to cut back. On the other hand, if you list all of your expenses out line by line and total them up, the numbers won’t lie. You’ll see exactly where your money is going, and from there, you can find ways to free up cash to increase your savings.
Getting Started with Budgeting
While the idea of creating a budget may seem daunting, its actually the ideal thing to do. But before you create that budget, there are a few things that you should do which would help you budget properly.
Gather Your Expenses
The first step to creating your budget is to first know what you monthly billing is. This ranges from your rent or mortgage, utilities, credit card, cable, internet etc. Also, any bill that you pay less on should be noted like grocery shopping and since your monthly bill is not fixed, reviewing your account statement would also help you in knowing what you spend on.
Determine Your Monthly Income
Knowing your monthly income should be far easier than gathering your expenses. Your bank statement should tell you all you need to know about this and if you receive any other monthly payment, be sure to take note of this.
Create Your Monthly Expenditure
Creating a monthly expenditure with all the information you got from gathering your expenses would be easy. List out the most important and necessary things like rent or mortgage, credit card etc. and make them your priority expenses. Also, remember to create an irregular expenditure as monthly expenditure is not mostly fixed to a certain amount. Irregular expenditure may include car repair and insurance.
Subtract Expenses from Income
Subtracting you expenses from your income is the final step to budgeting as it would tell you how what steps to take if your living expenses is more than your income or if your income is more. After subtracting your monthly expenses from your monthly income and you have left overs, this can be used as savings or in investment to help increase your income but if you have a negative result, it is advised that you reduce your monthly expenses or increase your income.
WHAT BUDGETING DOES FOR YOU?
