Principles Behind Frugal Budget
Principles of Good Budget
Education on how to use your hard- earned cash is very important for the realization of your long term goals - like having a home or car, without bogging you down with a lot information and jargon, I would go right ahead and come up with a framework on how to spend income wisely.
There are few principles that are common to every income earner like:
Paying taxes – At some point you will be required to pay government taxes, if you are not required to pay then you have avoided one of the big expenses.
Giving out to charity – After paying taxes, you need to give out to charity, a minimum of 2.5% of your earning after tax; you can give more depending on your income, you need to give this charity to people close to you who need it – parents, relatives, poor and needy - .
Paying debts – You will need to set aside around 10% of your (income after tax) monthly to pay your outstanding debts.
Savings – You will also need to set aside 10% of your (income after tax) for saving.
Spending (prioritizing expenses) after creating a budget - So far you have spent around 25%-50% of your income, depending on whether you are paying tax or not, the remaining can be enjoyed for the right purposes, first paying off major expenses.
Tax � 30%
Charity -10% of (income after tax)
Other statutory expenses(pensions, medical)
Income after Statutory expenses
Income after paying off debt and saving
Income after fixed costs