First, why is personal budget discipline necessary?
It's necessary because without it, you're going spend more than you earn and end up living the rest of your life in debt.
Spending one's entire life in debt doesn't produce growth. Personal finance growth is founded on having substantial savings, which could form a significant portion of initial investment capital.
Investments drive personal growth.
So to grow financially, personal budget discipline is necessary. However personal budget discipline can't be obtained in the absence of effective spending habits.
What are the effective spending habits that guarantee personal budget discipline?
1. Having the habit of preparing a personal budget regualrly.
Having a personal budget is the starting point and the driver of effective spending habits. A personal budget is a financial plan that clearly defines your expected revenue and expected expenses.
For a personal budget to be effective, it must be realistic. That is, you should be certain about sources of anticipated revenue. The regular the sources, the higher the certainty
2. Having the habit of distinguishing between needs and wants.
Your personal budget should separate spendings between on needs and on wants, with needs taking the larger percentage.
Your needs are, simply put, those things you can't do without. These are food, shelter, clothing and health needs. You may wish to add eudcation to the list of needs
Your wants are those things you desire but which you can do without, aomething like entertainment.
After separating the two and making provisions in your budget for them, remember to set aside a percentage of your regular earnings as savings.
3. Having the habits of drawing up a shopping list.
And sticking to it.
Stick to your shopping list, everytime you go shopping . This habit would condition you to stay within your personal budget.
It does more. The habit of sticking to a shopping list stops impulse buying.
Buying on impulse increases the chances of wasting money to buy stuff you don't need. When you make conscious efforts to grow your personal finance, you force yourself to stop wasting money and start saving it.
4. Reconcile every emergency spending.
Sometimes, the need to spend on an emergency may arise. When such a spending is made, it makes financial sense to reconcile it by sacrificing an item or some items of equivalent value in your personal budget.
An item or items sacrificed shouldn't be of immediate need. And the satisfaction of sacrificed items should only be postponed and not eliminated completely. That is, go for a virement instead of a cancellation.
At the end, having the habit of sticking to personal budget saves money for you.
