Look after your budget

Why Should I Budget?

Controlling your financial affairs requires a budget. For many people, the word "budget" has a negative connotation. Instead of thinking of a budget as financial handcuffs, think of it as a means to achieve financial success.

Whether you make thousands of dollars a year or hundreds of thousands of dollars a year, a budget is the first and most important step you can take towards putting your money to work for you instead of being controlled by it and forever falling short of your financial goals.

To those of you who think you know where your money goes without keeping detailed records, I issue this challenge: keep track of every cent you spend for one month. I promise you'll be surprised and perhaps shocked by how much some of your "small" expenditures add up to.

Budgeting and tracking your expenses gives you a strong sense of where your money goes and can help you reach your financial goals, whether they are saving for a down payment on a house, starting a college fund for your kids, buying a new car, planning for retirement, paying off the credit cards, or saving for that trip.

Since financial matters are one of the leading causes of marital discord and divorce, implementing a budget and saving for the future can also have positive effects on your relationship with your spouse or partner.

To set up a good, workable budget requires a few steps.

There are a number of software programs available, however if you can set up an excel sheet, that is all you may need.

The first step is to set your financial goals. As with anything else in life, without financial goals and specific plans for meeting them, we drift along and leave our future to chance.

Identify and write down your financial goals, whether they are for your kids education, buying a new car, saving for a deposit to buy a house, going on holiday, paying off credit card debt, or planning for retirement.

The second step is to break each financial goal down into several short-term (less than 1 year), medium-term (1 to 3 years) and long-term (5 years or more) goals.

The third step is to set up a recording system and enter ALL expenditure on a daiy or weekly basis, keeping track of how your spending aligns with your short term financial goals. If you are spot-on with your short term goals, the long term goals will fall into place.

There are no hard and fast rules for implementing a financial plan. The important thing is to do SOMETHING, and to start NOW.