Budgeting -- ooh, what a scary word! If you want to frighten someone
whose finances are out of control, suggest that they tally up their
expenses on a piece of paper. We all understand the value of such an
exercise, but when it comes to the practicality of putting a budget
together, we get cold feet. Budgeting doesn't have to be so painful,
when you have a systematic series of steps to follow.
Visit if
Tip 1,
Tip 2,
Tip 3,
Tip 4 and
Tip 5 if you have not yet read it.
WHAT'S THE VERDICT?
So, comparing income to expenses, how does
it look? If you came out in the black, congratulations! How much do you
have left over? Regardless of how small or large the amount is, start
stashing it away into savings and investments! Your choice of how to
proceed will depend on your financial goals -- investing for retirement
will involve less liquidity and more risk than just saving for next
year's vacation. The main thing to remember is that you should build
your savings and investments into your budget just like a bill -- and
take care of these long-term responsibilities FIRST, before other costs.
That's the secret to good financial management.
Now, if you ended
up in the red, we need to talk. The first step is to look at spending
which can be reduced or even eliminated. Start by examining those
"spending leaks" -- if they give you pleasure and satisfaction, dandy.
Certainly late fees and interest charges don't fall into this category!
But you can still overdo a good thing.
Ask yourself if eating out 4
times a week gives you 4 times more pleasure than doing it just once.
And could you get as much pleasure if you cooked a good homemade meal?
Is the ridiculous mortgage on that 10,000 square foot house worth it? Or
could you be just as happy (or even happier with less financial stress)
in a place half the size? Also look for convenience expenses -- things
that we spend money on because we are overwhelmed, too busy, or just
worn out.
Perhaps by re-evaluating how you use your time, you
might discover that many of these expenses are just symptoms of
misplaced priorities. When you arrive at a place where all of your
spending decisions are DELIBERATE ones, you will find yourself several
steps and quite a few dollars closer to a balanced budget that allows
you to reach all of your financial goals.
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