Rules of budgeting [1/4]

Greetings readers,

Welcome to the 3rd instalment in the series dedicated to financial discipline. If you've missed the previous posts, we discussed about expense tracking and debt assessment. Fun topics, I know... Bet you're all excited about budgeting, right? 

Well, you'd better be, because that is what is coming up today. This will be the first post on budgeting in a small series.

What is a budget you might ask? According to the investopedia:

A budget is an estimation of revenue and expenses over a specified future period of time and is usually compiled and re-evaluated on a periodic basis. Budgets can be made for a person, a group of people, a business, a government, or just about anything else that makes and spends money.

From the previous exercises we should have the monthly revenue and expenses. With that in hand we can further establish what is the minimum living expenses per month. This is where it gets tricky as now you need to determine what qualifies as minimum living expenses. In my view this should cover only items like rent/mortgage payments, utilities, groceries, phone and internet subscription and your chosen method of transportation (if you have more to choose from then the basic choice should be the cheapest that gets you from A to B in the timeframe you need). Why this selection? Here's a list of reasons below:

  • Rent/mortgage payments because  you need to ensure you have a place to live.
  • Utilities because you need a certain level of comfort and to survive.
  • Groceries because you need to survive. 
  • Phone and internet subscription because you need to be able to communicate.
  • Chosen method of transportation because you need to get places.

Anything not falling in this category should not be seen as minimum living expenses. 

The next step is adding the figures to each category. All of the categories except the groceries should have a fixed cost next to it. For the groceries, work out what you spend on average per month and if you are really tight with money then either take 50% or 75% of that amount. Then work during the month to stay within the budget. That can mean buying more vegetables, rice, pasta, less processed meats and cheeses etc.

With this taken care of any remaining income can be allocated to the other categories in your budget, which we will explore in the following posts. 

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Take care


The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial, legal or tax advice. The content of this article reflects solely the opinions and beliefs of the author, who is not a licensed financial advisor or registered investment advisor. The author strongly recommends that you perform your own independent research and/or speak with a qualified professional before making any financial decisions.


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Happy Hour Finances
Happy Hour Finances

This blog aims to tackle personal finances matters, from the more basic concepts that can be applied in every day life to slightly more advanced concepts that require a certain degree of being intentional with improving your finances.

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