Getting Money with Budgeting, Part 1
by Jane Chidester
What I'm about to say will be
counterintuitive to most, I know. I hope to prove in a series of brief articles
that making budgeting a way of life is not the torture mechanism we've been
trained to think it is! Together, let's explode some of the myths associated
with budgeting -- myths that prevent many people fromgetting the many benefits
of a money plan. With all of the information we have today about handling
finances, why do the headlines still broadcast that "Bankruptcy is Up," "Saving
is Down," and "Spending is Out of Control?"
My experience is that most of us go through our school years focused on job
or career training that teaches us how to earn money, yet leaves us with
no foundation for how to spend money -- spend it wisely, that is. After years
of waiting to get out of school, how quickly things can happen. Before we
know it, we are out in the "real" world with a rent or mortgage, groceries,
kids, and bills of every description. I like to use the analogy in my seminars
that this scenario is much akin to learning all the skills to build a house-the
carpentry, plumbing, electrical, etc., without ever learning how
to read or draw a blueprint!
Over the next few articles I'll share the secrets of this "new attitude."
I'll show you how to find extra money in your paycheck every month, without
having to "give up" or "deprive" yourself -- things normally associated with
"going on a budget!" Yes, you can actually get money by budgeting! So, let's
get started...
Why Budget?
A budget is the most fundamental and most effective financial management
tool available to anyone. Yes, anyone -- whether you are earning thousands
of dollars a year, or hundreds of thousands of dollars. It is extremely important
to know how much money you have to spend, and where you are spending it.
Yes, some of your "spending" might be for investments, but there is an important
distinction between creating a personal budget and deciding where to invest your extra income.
A budget is the first and most important step towards maximizing the power
of your money.
What is in it for you?
Just about everything. A carpenter would never start work on a new house
without a blueprint. An aerospace firm would never begin construction on
a new rocket booster without a detailed set of design specifications. Yet
many of us find ourselves in the circumstance of getting out on our own and
making, spending, and investing money without a plan to guide us. Budgeting
is about planning. And planning is crucial to produce a desired result.
What is a budget?
A budget is a money plan. With it, you can organize and control your financial
resources, set and realize goals, and decide in advance how your money will
work for you. A budget can be as simple as it is powerful. The basic idea
behind budgeting is to save money up front for both known and unknown
expenses.
Seven Benefits of Budgeting
Know what is going on. Personal budgeting allows you to know exactly
how much money you have -- even down to the penny, if you so desire. Furthermore,
a budget is a self-education tool that shows you how your funds are allocated,
how they are working for you, what your plans are for them, and how far along
you are toward reaching your goals. "Knowledge is power," as the oft-quoted
saying of George Eliot goes, and knowing about your money is the first step
toward controlling it. That leads us to our next benefit:
Jane Chidester is the author of
BudgetYes! and excellent budgeting resource.
Control. A budget is the key
to enabling you to take charge of your finances. With a budget, you have
the tools to decide exactly what is going to happen to your hard-earned money
-- and when. You can be in control of your money, instead of having your
money limit what you do. This bears repeating: you can be in control of your
money, instead of letting it control you!
Organization. Even in its simplest form, a budget systematizes, or
divides, funds into categories of expenditures and savings. Beyond that,
however, budgets can provide further organization by automatically providing
records of all your monetary transactions. They can also provide the foundation
for a simple filing system to organize bills, receipts, and financial
statements.
Communication. If you are married, have a family, or share money with
anyone, having a budget that you both (or all) create together is a key to
resolving personal differences about money handling. The budget is a
communication tool to discuss the priorities for where your money should
be spent, as well as enabling all involved parties to "run" the system.
Take advantage of opportunities. Knowing the exact state of your personal
monetary affairs, and being in control of them, allows you to take advantage
of opportunities that you might otherwise miss. Have you ever wondered if
you could afford something? With a budget, you will never have to wonder
again -- you will know.
Extra time. All your financial transactions are automatically organized
for tax time, for creditor questions, in fact, for any query which may come
up regarding how and when you spent money. Being armed with such information
sure saves time digging through old records.
Extra money. This might well be everyone's favorite benefit. A budget
will almost certainly produce extra money for you to do with as you wish.
Hidden fees and lost interest paid to outsiders can be eliminated forever.
Unnecessary expenditures, once identified, can be stripped out. Savings,
even small ones, can be accumulated and made to work for you.
About the Author:
Jane Chidester is the author
of
BudgetYes!
21st Century Solutions for Taking Control of Your Money Now! She conducts
seminars and is a published columnist on personal budgeting topics. Visit
her website Budget Central: Personal
Budgeting Information and Resources Repository of information and resources
on personal budgeting, financial planning, and household money management
-- a complete budgeting education.
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