Budgeting lies at the heart of
every journey that you are ever going to take to your “freedom” financial
liberation.
Until
and unless you learn how to budget and more importantly to stick to your
budget, you are a long way away from realizing your dream (yes, we all secretly
dream of being rich). It doesn’t matter that you are living paycheck to
paycheck, or are earning a 5 or 6 figure salary, if you are to make it in life with
a smile; you need to know where your money is going every month, and every day.
You need to plan where you are going to be spending, how much and on what. Unlike
what you are now fearing, what you may have been made to believe all your life,
budgeting isn’t all about restricting what you spend money on and cutting out
all the fun in your life, budgeting is not about frustrating your lifestyle.
It’s really about understanding how much money you have, where it goes, and
then planning how to best allocate those funds, it is about learning to have a
bit of fun with your hard earned money.
For
most people, the word “budget” conjures up thoughts of paper pinching and the
unpleasant task of crunching numbers, walking around shops with a calculator, comparing
prices and arguing that a can of coke that is 5c cheaper at Shoprite is a
better buy to the one at Spa, while the bag of rice that is 10cents cheaper at
Spa must be bought at all costs. Most people imagine that throttling around
shops, from one to the next picking different items that have a few cents differential,
and making a 1 hour experience to be a 5 hour exhausting process is the heart
of budgeting.
This
couldn’t be further from the truth. A budget is at the cornerstone of a solid
financial foundation, regardless of your situation, isn’t that hard to do and
is fun.
Unfortunately,
many people think of budgeting as depriving themselves and they avoid it like
they do exercise. However, just like an exercise regime is just a program for managing
your weight, and has dire consequences if you eat and choose to ignore it, budgeting
is also just a program for managing your finances, a program to teach you how
to spend when.
If you are hitting a mental speedbump when you
hear the word "budget", try and think of its as a different act,
think of it as financial discipline that will help you have that status of
being called a millionaire. Yes, it is possible to make that first ever so
elusive million, but like in everything else that we attempt to do in this
life, there are processes that we need put in place, and then adhere to.
Budget therefore should be a proactive approach, rather than a
reactive approach, to managing your money.
What
is this Budget therefore?
A budget is nothing
more than a breakdown and plan of how much money you have coming into your “personal
bank” balance and where it goes.
Basically,
budgeting is the art of making sure that you are spending less than what you are
bringing in. Yes, if you master this tact, you cannot be swimming in debt, you
cannot be crying yourself to sleep, suicidal for every phone call you receive
is from someone wanting to ridicule and instil fear in your heart. Budgeting helps
you plan your life (prepare yourself) for both the short- and long-term.
Could you imagine a business becoming
successful if it didn’t keep track of its income and expenses? The same holds
true when it comes to your personal finances. If you don’t know how much money
you have coming in and where it goes, your road to becoming a millionaire will not
just be a difficult one but will be an almost impossibility, your life will be
in the mess that I suspect it already is in.
The biggest fear that most people have
when creating a budgt is that they will
need to suddenly cut back on all of the fun spending -- things like the occasional
coffee or dinner out, movie night, or even the trip to your rural home or to
the boyfriend’s house for the holidays. Most people fear budgeting and label it
as a means to an end, a surety that they stop loving life, buying the things
that they enjoy. Yes, its true that you need to cut some spending after putting
together a budget, but without actually sitting down and creating a Budget, it
is impossible to know what expenses need to be cut, if any. It is impossible to
know what spend is priority, safe and fun for you. It is impossible to live a
life that is fulfilling.
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