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Have you ever made a budget before?


But have you ever tried allocating your allowance or salary for many different things, and then try your hardest to stay within those boundaries that you set?

If yes, then congratulations, you’ve experienced budgeting before.

The thing is, just budgeting simply isn’t enough. Especially if you’re still just a student, or if you’re an adult but you’re living paycheck-to-paycheck, simple budgeting just won’t cut it if you want to live a life free from most everyday financial woes.

What you need is wise budgeting.

What is budgeting?

According to Merriam-Webster, the literal meaning of the word budget is,

a : a statement of the financial position of an administration (as of a nation) for a definite period of time based on estimates of expenditures during the period and proposals for financing them.

b : a plan for the coordination of resources and expenditures

Basically, what it means in the personal finance world is that budgeting is the allocation of certain amounts of your money to be used for some kind of purpose.

For example, if you get $1000 a month, and you separate $500 for your bills and $500 for your expenses, then that is budgeting.

But like I said above, that simply isn’t enough. Just allocating a certain amount of money for different purposes every month won’t cut it. This habit is not that of a rich man, whose habits are the ones that we want to adapt and live out.

What is wise budgeting?

In contrast to this plain type of budgeting, wise budgeting is learning how to prioritize the categories that you would be allocating your money to.

thewisebudget money budget wisely

For example, if you get $1000 a month, then to be a wise budgeter, you must first determine what your highest priorities are. If you’re a student, perhaps this is the expenses category. Or if you’re a fresh graduate, perhaps this is the student loans category. On the other hand, if you’re a working employee, perhaps this is the bills category.

Your first step to creating your own budget wisely is to set your priorities straight.

(income) – (savings) = (expenses)

To be a wise budgeter, you should know how to set aside some savings per month, no matter how little it may seem to be.

One good rule of thumb to follow is this tried and tested formula for saving consistently every month. Income minus savings equals expenses.

The trick here is to put away first what you want to save for the month. It doesn’t have to be big at all. When I was in college, I could only save about $50 a month, which eventually grew as I also began to earn more. What’s important here is to make sure that this is the first thing you do after receiving your allowance or salary. Afterwards, the rest can be allocated for different purposes.

You can even treat it as a recurring monthly expense, if it helps. “Pay yourself first,” is the motto to adapt in this situation. I personally do this too, and I can assure you that it helps me tremendously.


Why is this effective, you may ask? By treating your savings as an expense, you will feel required to ‘pay’ it every month, thus adding to your savings with minimal effort. This tactic also allows you to ensure that you get to save every month, even if you manage to zero out the ‘expenses’ category in your budget.