Getting the most out of your money by budgeting
Nearly everyone desires wealth and riches in some measure or the other. This is perfectly legitimate. What is however undesirable is the way and manner many intend to attain it. I have discovered that many people hope, wish, dream and even pray for riches. Riches continues to elude them because they are not taking concrete steps to turn their wishes to reality.Those who wish/pray for riches without taking concrete steps will have riches continue to elude them. Click To Tweet
The average man on the street wishes to sleep a pauper and wake up a billionaire in the shortest time possible. Wealth is never built that way because it is not a state of quick-fix, rather it is slowly and steadily amassed and developed. You start from the little you have and building consistently and gradually over a period of time will take you to your wealthy place.Wealth is not a state of quick fix, rather it is slowly and steadily amassed and developed over a period of time. Click To Tweet
The question now is how have you been using the little you have? If you cannot manage little you can never manage much. You must pass the test of having a little and managing it successfully before you can be promoted to taking the test of managing a lot.
One of the most essential tools you will need to put in place in order to make the most of your money is to start making use of a budget. A budget is simply a document where you plan what funds come in and how it is spent. It is best to put in place a monthly budget which you can use to track your inflows and outflows. Here’s a budget template from personal finance blogger frugalfanatic.com that you can easily customise. You can also log onto to an excel tutorial that teaches you how to create a simple budget.A monthly budget is a tool that will help you track the comings and goings of your money. Click To Tweet
Now the beauty of the budget is that you can use it as a planning tool, prepared before you start to spend. There are usually two columns – budget and actual. List all your inflows and expenses accordingly. Think through and budget what you expect to come in from all sources such as salaries, gifts and other incomes. Budget for all your expenses as well (transport, feeding, clothing, phone calls) etc.The budget is a planning tool that should be prepared before you start spending your money Click To Tweet
Be diligent to record your spend in the actual columns from the first to the last day of the month. If you are paid before month end say 25th then close your budget for the current month on the 24th. Create a budget for the next month before spending your income.Be wise to budget before spending and not the other way around Click To Tweet
It is vital you compare what you budgeted at the beginning of the month with what you spent. The difference shows whether you spent less or spent more,. While it’s good to spend less than budget it’s likely that unforeseen circumstances arose that made you spend more. Thus the budget gives you an understanding of why you spent certain amounts. When the next month comes you can increase or reduce your budget depending on your projections and expectations.Make sure to draw inferences from what was budgeted vs what was actually spent during the month. Click To Tweet
Take care to add up your inflows and outflows and then deduct your outflows from your inflows. A negative balance means you spent more than what came in, while a positive balance means you spent less. You can carry something over to the next month. Proceed to also check which expenses you can cut down thereby freeing money for other purposes.If inflows are higher than outflows you have a positive cash flow and negative cash flow if it is vice-versa. Click To Tweet
Consistent budgeting for 3 months begins to expose you to trends on how you spend your money. For instance you will begin to see what is spent on your phone bills. This should lead you to look for cheaper ways to communicate if the amount is much. You begin to take more control of your money because you have become more knowledgeable about where your money goes.A budget makes you extremely knowledgeable about where your money is going. Click To Tweet
Most importantly try to live on ninety percent or less of your inflows. Save the rest toward future investment in moneymaking ventures. Take out this ten percent, put it in an account and discipline yourself to invest it. This is where budgeting comes in handy. You will better control how you spend the remaining ninety percent and live comfortably with it. You will be fine if you cut off all unnecessary expenditure.Endeavor to spend or live on less than ninety percent of your income. This ten per cent can then be kept for the sole purposes of investing and multiplication. Click To Tweet
Saving, planning and controlling your expenditure are tests you must pass on the road to wealth and riches. A budget is the perfect tool to help you in grasping the fundamentals of all three. Once you succeed in managing small sums effectively bigger sums gradually start to come your way until it becomes continual. Budgets are not difficult to manage. Begin today to make the most of your money!
Here are ten benefits of budgeting, compiled by the guys over at budgetingincome.com:
- Gives you control over your money
- Keeps you focused on your money goals
- Makes you aware what is going on with your money
- Helps you organise your spending and savings
- Makes you decide in advance how your money will work for you
- Enables you to save for expected and unexpected costs
- Enables you to communicate with your significant others about money
- Provides you with an early warning for potential problems
- Helps you determine if you can take debt and how much
- Enables you to produce extra money
So don’t procrastinate or delay, get a budget to make the most of your money today!