Access This ToolPersonal Finance Budgeting: Personal Budgeting Strategies
We can’t improve our financial situation until we can measure it. Budgeting allows us to understand how we are currently spending our money. If we spend 40 hours per week earning our income, isn’t it prudent to spend 30 minutes per month planning how we spend it? Using the budgeting tool below can help us to better understand our spending habits. Furthermore, the budgeting tool allows us to determine where the money for our freedom account contributions will come from.
The budgeting tool is easy to use, but we suggest you read chapter 7 in Poor No More before you use it.
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Budget Planning and Household Budgeting
Often people incorrectly view personal budgets as restricting and controlling. They avoid household budgeting because they fear the results will be bad news and force us to eliminate fun activities. However, we cannot improve our personal finances until we can understand them and measure them. A budget is just a tool to give us a clearer understanding of our personal finances. We must complete a personal budget for ourselves regularly in order to track our progress toward financial freedom and success in obtaining everything we want. It is the key to financial planning.
We must see where we are, before we can plan where we are going.
A budget can illuminate some unnecessary expenses while hopefully showing us a path to afford some extra luxuries. Budgeting is the first step on the path to financial freedom.
Completing our personal budget is not a one-time event. Instead, it is a multi-pass process we refine and perform regularly as we make improvements. As we regain control, we feel better and more financially secure. Family money management is the key to success.
If we spend 40 hours a week earning our income, isn’t it prudent to spend 30 minutes a month planning how we spend it?
This household budgeting process should begin at the basic “need” level. Once we provide for our basic “needs” then we can proceed with a personal budget that will include most of our “wants”. Read Poor No More for tips on budgeting, personal finance budgeting, and why budgeting is important.
Debt should not be included in our basic budget because we should not have debt. Debt is the terrible legacy we have left ourselves due to prior excesses. Debt must be eliminated – chapter 9 in Poor No More will deal with this subject. If we have debt it must be fully paid off before you can start to fund the “Freedom Account”.
Remember that budgeting is a multi pass process we refine and revise as we reduce our expenses. We should use the budgeting tool above coupled with the savings suggestions from Poor No More to determine what is obtainable. The ultimate goal is a budget that allows us to have first what we “need” and then what we “want”.
