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Every dollar needs a name… why you might actually need a budget.
Everyone at least spend a dollar or more in a day and more as the week passes by, thus it would be wisdom on your part to have a financial plan so you can actually be in charge and not on the other hand wonder where all your money went to.
I know you may be used to the fear that a budget would restrict you. Instead it set you free.
According to Wikipedia, a budget is a financial plan for a defined period of time, usually a year. It may also include planned sales volumes and revenues, resource, resource quantities cost and expenses, assets, liabilities and cash flow.
A budget is telling your money where to go instead of wondering where it went – Dave Ramsey.
Budgeting is not hard work like some persons may have made you believe. Budget is not rocket science; it is very simple and can actually save you months, years of panic and regret if you apply its working principles.
The essence of budgeting is that you would be financially literate: you control money, instead of it controlling you.
The truth is that you have to take deliberately steps towards creating the kind of life you would love and the kind of business you would want to have as well. virtually everything you may want to do in life require finance at some point having a good budget plan in place would actually give you an edge to maintaining a balance in other aspect of your endeavor as well.
The idea behind budget is prioritizing in real time. Giving a name to every dollar you have, means before you spend a penny of you, you think about what want it should meet accordingly.
YNAB1 describe it:
When you hear the word budget, you probably think about spreadsheets and accounting (agads!). You think about restriction or denial. Let those stereotypes go. Your budget is your priorities, all laid out. So you can reach them.
WHY DO YOU NEED A BUDGET?
So what is the point of this whole budget thing you may ask!
• A budget would help you set a pattern and thus give you a measuring stick for proper evaluation.
When you use a budget for your business for instance, it helps you determine whether or not you are in sync with the set goals. Setting a budget however is not just a business related thing it sure can be used in your personal day to day expenses and more. Budget helps you work with objectives and certainty.
”if you aim at noting, you will hit it every time” _ Zig ziglar
Settling up a budget enables you create a spending plan for your money and thus ensures you have enough money for the things you need and the things that are important to you. Having a budget and following it true would take you in charge and out of the debt if you are currently in any.
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Like YNAB would say “ you don’t know - you exactly what you re going to do hour by hour, weeks or months from now your finances work the same way. You can and should set broad outlines for your money. Clarify your priorities and set goals. But when the details change, and they will, change them.Sometimes even priorities change. It doesn’t mean you have failed at the budgeting. It is normal. 1
STEPS TO A BUDGET
You can actually avoid a potential personal financial crisis by getting back to basics with a budget you can stick to. Here’s how to start:
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Be realistic
Having a defined goals for your money will help you make smart spending choices.
Ask yourself:
• What do I want my finances to look like in one year? Decide what’s important to you and start there.
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Know your Income and Expenses
Having a track of how much comes in and how it is been used be safe you a lot of troubles in the long run. You probably know how much you earn each month – but do you also know where it all goes?
• Find out by tracking what you’re spending. Spend as you normally would, but for a few weeks, jot down every cent you spend. It’s easy and you might be amazed by what you find out.
Separate Your Needs and Wants
You really should Ask yourself:
Do I want this or do I need it?
Will spending this money get me closer to my financial goals or further away?
Can I live without it?
Set clear priorities for yourself and the decisions become easier to make.
Thanks you for your time and remember that very first step begins with you thinking it through and inking your thought. It is not truly a goal / budget until you have the discipline to write it down.