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Budgeting; determine where your money goes every month

Dave Ramsey rightly said, “A budget is telling your money where to go instead of wondering where it went.” It is the art of planning one’s expenses based on one’s income for a specific period of time. This can be done at the individual level, at the corporate level, and at the government level. Inculcating the art of budgeting helps in keeping track of one’s expenses and achieving one’s financial goals.


To start Budgeting practice these steps:

1. Calculate your income: Whether as a salary earner or as a freelancer or as a businessman/woman, have an estimate of how much you earn at the end of each month. Freelancers have been advised to use their lowest earnings in the previous year as their base estimate.

2. Create a list of monthly expenses: Group them into fixed and variable expenses. Fixed expenses include rent payment, subscriptions, and the like. Variable expenses include groceries (food items), gifts, airtime, and the like. Ensure that the expenses do not exceed the income.

3. If expenses exceed income, adopt the 50-30-20 rule. 50% of the income should be spent on needs; 30% on wants and 20% on savings/debt repayment. Another alternative is to find items under variable expenses that can be removed for a while.

4. Do an evaluation from time to time to ensure that you are on track and the budget is helping you achieve your dreams. Remember that budgeting isn’t about limiting yourself, it’s about making the things that excite you possible