Why A Budget Is Important
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People say that money makes the world go round. Some say quite the contrary that money is the root of all evil. I stand on middle ground, believing the love of money to be the root of all evil. So while I don’t love money, I do like it and I like it a lot. When you really like something, you try and keep it around; you preserve it. Considering that money is a medium of exchange we all must have in order to meet our needs, I think it wise to find ways whereby we conserve it. With conservation in mind, budgeting is the essential blueprint design for monetary upkeep; therefore every household should implement a budget. In order to build this household design we need to know more about it.
Well, you may ask, what is a budget and why is it important. A budget is a plan, individuals and businesses alike use to order their financial consumption; without this order a business or household, more than likely, will overspend, overestimating their ability to do so. For example, a young man, excited about his monthly allowance, may celebrate by eating out on weekends. Let’s say, hypothetically, he makes $100 weekly so he purchases a sandwich from subway at $5.00, twice weekly. He does have other vital needs and he really wants to save at least 10% of his weekly income. Nevertheless, he loves to eat out, and he has compulsive spending habits too. He is just not use to having money. As a consequence, this young man finds himself, in six months, at a point of frustration, having no savings and very little spending money. What this young man needs is monitoring; he needs some type of alarm set to go off when he gets off. A budget is a plan that provides such an alarm system.
This alarm system provides the following protection: it provides assurance that your money is being spent wisely. This indemnity comes by way of watchfully observing your spending and expenses. When you designate on paper your goal, in reference to your money, it sets certain guidelines which either deny or allot you the funds to carry out your order, depending on its delegated importance. Hence, this young man, with a plan, as such, would have surrendered his compulsive spending and weekly celebratory habits for the better good− savings and meeting those vital needs of his. Thus, as illustrated, while the budget is providing the perfect aim toward one’s financial goal, it is at the same time preventing cash leakage, that is, unnecessary cash expenditures. With this provision in place overtime, not only will financial goals be met, but recreational and other desires will be too. Budgets seem to have the ability to plug in leakages and add-ons to our provisionary measures. They so fine-tune our financial goals in that we develop more leverage and so our goals become bigger and better. We develop through this genius design, the ability to create leverage for entertainment and recreation. What a fun thing to do and see− money, through your own budgetary ingenuity, grows into retirement, investment, scholarship funds and the like.
Here’s hoping I have created a desire in you for bigger and better; for more leverage, more control all attainable through your own unique budget plan. So, go ahead; develop your plan right now or as soon as you can. Developing your plan should take about 30 minutes to an hour, and it is relatively easy. There are seven steps to the process. First, assemble all your financial statements (utility bills, bank statements and other, which reveal an income or expense). These statements are helpful in creating a monthly average. Second, make note of all sources of income. Third, make a list of monthly expenses. Fourth, categorize those expenses, designating them to be either variable or fixed. Variable expenses are irregular, like grocery bills or entertainment fees. These can easily be adjusted. On the other hand, fixed expenses remain constant and are a must do. They include rent, insurance, utility bills, and so on. Next, sum up your monthly expenses and monthly income. Check your result: good equals more income and less expense; bad signifies more expense and less income. Now make adjustments to those expenses; create equilibrium between your income and your expense. This balancing act is attained when extra income is placed in a savings, retirement, i.e. or when an undesired expense is cut by modifying a variable expense, such as, a cutback back on family entertainment. Now, upon completion of these steps, you have basically developed a personalized budget plan. As you can see, Creating a Budget Doesn't Have to be Hard.
Thus far, I have mentioned six out of seven required steps. The final step deals with the continuity of your budget plan; it is vital that you review your budget plan, monthly, because you may for the most part find it needs revision. Do not fret. This is absolutely normal; on average a budget plan kicks-in after about 3 or 4 months of close scrutiny. Think of it as a health check. In order to remain healthy, one must get regular check-ups, so it is, too, with financial health. Always, always review your monthly budget plan; stick to the plan; and make revisions when appropriate. With that being said, I close, wishing you happiness, prosperity and good financial health throughout this year and beyond.
Peace & Joy,
Fast Money Rite
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A native of United States, Debbie Jones, is currently based in Decatur, Georgia. Working as a life coach, teacher, trainer, speaker, and writer, she has spent last three and half years in Public Demonstration of Witchcraft in the U.S. Divinely initiated by the Holy Spirit.
Through her work and life experiences, Debbie has developed a strong passion for encouraging others to embrace their differences and become empowered to choose their own paths.