Budgeting: First Step in Planning Your Own Finances
What is Personal Financial Planning?
Personal financial planning is typically made up of three core activities:
- Controlling your daily financial-related issues
- Designing, choosing and following a road toward long-term financial goals (e.g. buying a home, retiring with a comfortable lifestyle)
- Establishing a financial safety net in case of emergencies
By learning how to budget and having a budget, you will be able to accomplish the first step – to control you day-to-day financial matters.
Setting Up a Budget
In order to be able to set up a budget, you need to keep track of every penny you spend for one month. Yes, every penny, every cent! Without keeping DETAILED records, you will never know where your money goes. When you put all your records together, you will be surprised and possibly even disgusted by how much some of your “innocent” expenditures add up to. It’s both eye opening and mind-boggling as to how much our small habits and spending costs over time!
By budgeting, we can track these small, innocent expenses that we often don’t even think about. It’ll begin to give you a sense of where you money goes on a daily basis and by having a better understanding of the expenses you make and accumulate, you will be better able at reaching your financial goals. In fact, financial matters are one of the leading reasons for martial problems and divorce. By getting a head-start on understanding your spending, planning, executing a budget, and saving for the future, you can have far-reaching benefits in the relationships you have with your spouse or life partner.
In order to control your financial affairs that occur day-in-day-out, you will need a budget. Many people associate bad things with budgeting, such as financial handcuffs. On the contrary, the truth is, having a budget is necessary if you want to one day achieve financial success and security. No matter how small or how big your income is, a budget is still applicable and very important! It will help you to put your money to work for you, rather than have it the other way around – when your money controls you and you forever see yourself coming out short of your financial goals and needs.