To break it down in the most basic way, a budget is an itemized summary of your income and expenses for a certain period of time. It helps you determine whether you could pick up that coffee on the way home or whether you should have a cup of tea in the lunch room at work. Usually, a budget is created using a spreadsheet, and it provides a very organized, and easily understood breakdown of how much money you have coming in and how much you are letting go. A budget is a tool which will help you manage your money and set your spending priorities. It doesn’t matter how much or how little you have. A budget allows you attain financial freedom faster and results in less stress when it comes to wondering where your money is at any given point in time. With a budget, there are no surprises, because you’ve been planning all along.
Here are some steps to help you in starting your budget:
What’s the plan, man? A budget is like a journey. In order to reach your destination successfully, you must follow a map. So, what’s the plan? Do you want to pay off debt? Save more? Travel to your dream destination? A budget will help you assess your income, track your income and expenditure and help you to begin accumulating wealth.
This is the real life, not just fantasy! Always remember that while you may have dreams of vacationing in an exotic land or sampling foods you can’t pronounce, priorities must be properly set. In other words, you want to ensure your bills are paid and that you save at least a portion of your income before putting money in a category towards your long-term dreams.
Identify resources. Whether cash, a savings account or even a special skill, ensure you categorise all potential earnings so that you can clearly see what is available on a month-to-month basis.
All assets are not created equal. While there are some assets that become more valuable over time, some assets also depreciate or lose value. Take a car, for instance. From the time you drive a new car off the sales lot, it loses value. Over time, your car is worth less and less. This is called a depreciating asset and it would be wise to avoid making these types of purchases if you can.
One-time only? While it’s great to earn revenue whenever and wherever you can, omit earnings that are ‘one-off’ as these can skew your budget and are not recurring values.
Use the tools! It’s very easy to create a budget. Some people use Microsoft Excel, but you have the opportunity to use the BUDGET BUDDY in this App! It makes budgeting easy and fun. So, go ahead! Visit the BUDGET BUDDY now!