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It all begins with a humble penny!

Just as CNN’s Richard Quest would exclaim on his Quest Means Business Show, “It all begins with a humble penny!” personal budgeting is the foundation of effective financial management. Budgeting is a simple process that involves creating a plan on how to spend your money. In fact, it is recommended that you call it a “spending plan”. Creating this spending plan allows you to determine in advance whether you will have enough money to do the things you need to do or would like to do. A spending plan motivates you to;

  • gain control of your own finances;
  • get out of or stay out of debt;
  • create a nest egg for unforeseen expenses;
  • resist the urge to spend impulsively; and
  • achieve goals that you have set for yourself and your family.

Creating a detailed spending plan is key to managing your finances. It is also recommended that a spending plan be put down on paper or in a basic spreadsheet. Overall, an accurate monthly spending plan can help individuals and households reach their financial goals, whether they are saving for a car, buying a home or paying off student loans.

So what’s the plan of action?

  • Draw up your spending plan (budget);
  • Commit to the plan and get your loved ones to buy in to it too; and
  • If you are unsure or unable to find ways to save, speak to a financial advisor.

 As a guide, the following is the 100% rule of thumb spending plan:


Once you create your first spending plan, begin to use it and get a good feel for how it can keep your finances on track. Households and individuals may also want to map out their spending plans for 6 months to a year down the road. By doing this, they can easily forecast which months finances may be tight and which ones they may have extra money. This assists in avoiding some financial shocks as well as slipping into debt. Households can then consider ways to even out the highs and lows in their finances so that things can be more manageable.  In conclusion, always remember that every penny has power and it’s not about the quantum but all about what you do with the penny!

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