Let's Talk About ... Budgets!

Let’s talk about budgeting!

Please don’t feel intimidated; I feel like the exercise of budgeting is grossly misunderstood. The purpose of a budget is to assist you with planning and managing your finances. Budgets help you to manage your finances when they are closely monitored, and you are exercising discipline and making the necessary sacrifices.

This issue, though, has stemmed from our youth.

As a child, did your parents give you an allowance or did they give you money every single time you needed it for something?

Did they hold you accountable when you spent your money on something other than its intended purpose?

Depending on your response above, it may be no surprise that budgeting and managing your finances is difficult or considered an afterthought. You’ve always had someone to attend to your needs without holding you accountable and now you are an adult holding your own but have no clue how to hold it.

Before preparing your budget, you need some goals for yourself.

Some examples of goals are as follows:

1. To purchase a home/rental property

2. To always have an emergency fund that amounts to $2,500

3. To establish a vacation savings account that totals $5,000 each year

4. To never let your operating account get below $2,000

When setting your goals, please think about increasing your income and reducing your expenses. So ensure that you set SMART goals.

Here's an example of a S.M.A.R.T. goal.

Secondly, you need to develop a budget and your goals must be reflected in your budget. How is it you want to purchase a home, but you are not saving for a home? You want to go on vacation, but you are not saving for the vacation. It’s all about planning. This way we can avoid having to obtain (more than absolutely necessary) external financing. Avoid being that person who now is considering a budget after they are drowning in debt and have nowhere to turn. I want you to be the person who appreciates that debt should be used as a tool that you control and not the other way around.

Take a moment and write down all of your income and all of your expenses. Savings must be included in that “expense” line because as much as you have to make that credit card payment, you also have to pay yourself in the form of saving for the future. In a perfect world, you would do this assessment prior to taking on additional expenses or as a matter of fact taking on any expenses.

This is your roadmap. This is your guide. Take some time and develop your budget. What you put in is what you get out. If you continue to operate without a holistic budget, you will continue to have no financial freedom and no financial stability.

There is still a solution for you but you have to take that first step.

Choose a future filled with financial security. Financial security begins with a budget. A budget begins with SMART goals. SMART goals begin with an informed mindset!

You are a winner, and it begins with your mindset.