Budget Basics
Introduction to Budgeting
Budgets are necessary to achieve financial
freedom. People who can account for their money are people who are in control of
their finances. A plan is essential to success. Imagine a business running without
a financial plan, or building a home without blueprints. Not very safe.
Would you risk your investment without
knowing the game plan? Yet thousands, maybe millions, of Americans live paycheck
to paycheck without investigating where they are putting their money, what their
spending habits are, or when they will be out of debt.
Check out our
step-by-step budget implementation of a spending plan as well as easy-to-use
credit card debt worksheets.
The truth about budgets...
"A budget is restraining and limits
my freedom." ...
The Truth: No, the
very opposite is true. A budget grants you more independence and freedom to achieve
lifetime goals.
The Thought: "I cannot
solve my money problems unless I make more money."
The Truth: You may be able to solve your money problems earning your current salary with an appropriate
budget.
The Thought: "Budgets
are complicated and take to much time."
The Truth: With proper
instruction, anyone including children can start and maintain a budget. After you
have completed the initial work, maintaining your record system takes approximately
30 seconds per transaction.
Living paycheck to paycheck, with no
spending plan, no end-of-the-month summary report, no savings plan, or no idea of
when you would be out of debt is not the right way to plan for the future.
Do not worry about becoming a slave
to your budget and savings plan. It should reflect your values and it must be compliant
to your lifestyle. A budget can finally allow you to stop over spending and start
saving. It will bring order and new priorities into your life. Remember to review
the spending plan each income period so you can be certain your money is going exactly
where you planned.
It is not necessary to have an extensive
filing system for keeping track of expenses. Envelopes for receipts and account
sheets are all you need. Separate expenses into fixed and flexible categories, and
list them on an account sheets as you pay them.
Use business sized envelopes for each
month as you go along. Then get one big file or envelope, indicate the year or period
covered, and keep your monthly envelopes in it. Records from checking accounts,
tax related transactions, etc., should be saved for at least seven years. Tax returns
should be saved indefinitely. For household receipts, two or
three years is adequate.
Insurance policies should be saved as long as they are in force.
