The Engine to Financial Freedom

The Engine to Financial Liberation

Budgeting is the engine that drives all of financial success. Ask anyone that has ever made money – they will tell you that  to enure that they become succesful, from the little that they made from using their brains, hands and hearts, they also then took the time to understand

-       What they earn

-       What they spend

-       What they should actually spend

These are the three main components to any budget.

First you need to understand your capacity to make money. How much exactly do you earn in a month? You, not the money that your husband or your boyfriend promised you (we will come back to this one). You need to put a price tag on your abilities. What you do, how much of your time is utilized in the pursuit of generating wealth? How much are you (your service) worth? Whether you are fully employed or self-employed, your ability to generate revenue becomes critical in any budgeting exercise.

Then you review your monthly spent? What is taking up most of your money, is it something that is bringing you any type or form of value? Do you need it, or can you do without?

Once you understand what you are actually spending ask yourself this;

should you be spending what you currently are?

Looking at your income line (assets) against your expenses, are you being responsible with your money?

Budgeting is not difficult, and it is not only for those with limited funds. Budgeting simply brings simplicity for everyone who at some receives money to structure income and expenses of all size, and allows that each person is able to make conscious decisions about how they would prefer to allocate their money. It can also help people save for retirement, emergencies, a new car, a house, education or just about anything. For many people, having a solid budget in place, knowing how much money they have and knowing exactly where that money is going makes it easier for them to sleep at night.

Many people however, unfortunately mistakes budgeting as something that one must do only when they are short on cash. A young fresh starting employee may use a budget to cater for their daily travel and rent needs, a student may turn to a budget to try and figure out how to balance their allowances to what will be their required monthly spent. Wise new graduates create budgets to make sure that they are properly allocating their first paychecks among emergency savings, retirement savings, rent and utilities, and may rewards themselves for their hard work with the ever growing gadgets of cell phones and maybe even install wifi in their start up flats.

Young couples trying to figure out how to afford a wedding, or newlyweds wondering how to fit the expense of buying a house or having a child into their monthly cash flow, are also likely to make budgets. Of course, budgets are commonly associated with people of all ages who are barely able to make ends meet.

The truth is that budgeting isn't just for times when your money is tight or your life is undergoing a major transition. Budgeting is for everyone, rich and poor alike. In fact, budgeting will be that much easier in times of change if you do it all the time.

Where do you imagine successful companies like African Alliance, MTN and the company you work for, which I trust is successful would be today without proper budgeting? What about wealthy people like Warren Buffet? There's no way that these could have achieved such success without paying attention to their monthly, quarterly and annual cash inflow and outflow.

Budgeting won't just get you out of a rut - it can also help you get rich.