Mar 5, 2012

Budgeting 101 - Learn How To Save Your Money

By Umm Husam


Budgeting 101 is now in session. A budget is a plan of operation in relation to your money. Here are a few steps that can help you with your budgeting endeavors.

1. With the next few years in mind, write a list of needs and want. It is good to know what you HAVE to do, like paying your mortgage/rent, paying credit card debt or any debt, saving, etc. You should also have an idea of things you want like your next new phone or furniture. Once prioritized, you can move on to the next step.

2. Make paying off debt your number 1 priority. If you are one of the lucky ones who are debt free, you can skip step 2. Sadly many of us are in debt for various reasons such as school, life, health, etc.

3. Figure out how much of your income goes towards each of your responsibilities. Most financial experts say you should spend no more than 33% of your household income on you home/rent. There are plenty of cool free sites that help you organize yourself. My favorite is which shows you exactly how much of your income goes towards each of your bills. It also helps you make a plan for saving and getting out of debt. Mint has applications for your phone and apple products, making it possible to access your money situation no matter where you are.

4. You need to save. Period. If you plan ahead for things, like buying a house, car, and/or children going to college, it won’t hit you as hard when it is time to pay. Financial experts tell you that you should have enough money to live comfortably for 6 months if you were to lose your job today. Also, when you have money in case of emergencies, it will prevent you from falling in debt if something were to happen in the future. Just as a friendly reminder, any untouched money for a year will require that zakat be paid on it. This brings us to step 5.

5. Whenever possible, pay cash. The biggest problem with credit cards and even checks is that you don’t feel that you are really spending money. When you have cash in hand, you think twice before giving it up.

Inshallah if you implement these 5 steps in your life, you will be well on your way to tame your budgeting woes. Wishing you success in managing your money.

I'd love to hear your views on this topic. Please post in the comments section below! :)


An important, pragmatic article! :)

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