Everyone should have a working budget. There is a difference between having control and being controlled. Do want to be the slave or the master? Of course, we all want to be the master. In order to do that, you need to create a budget, but first you need a goal. Goals are integral to any successful endeavor. What are you trying accomplish? Is it debt elimination? Maybe you want to save for a new home, or a boat, or your child’s future education. Whatever the goal, write it down and embrace it. Keep your eye on it. You can not get anything done without a goal.
The Next Step
Then, you will need to keep track of where your money goes. Some experts recommend saving a couple months’ worth of receipts. Others say to investigate your banking account history. In whatever scenario, you should get a grasp of how you spend your money. Once you know where and how you spend your money, organize everything into categories.
Pay Yourself First, and Make it Automatic
In his book, Money: Master the Game, Anthony Robbins suggests that you set aside at least 10% to 20% of your income to savings, then make it automatic. Direct deposit it into a savings account monthly. If you never see the money, then you will not miss it! He also recommends saving future increases, such as raises and tax returns. A savings plan is necessary for a working budget. Without it, the unpredictability in life can mow down any working financial plan. When we think about putting money into our savings, we get upset because we want to use the money on other things we want. Once you see your savings adding up, you will be thankful you were smart with your money.
After you have captured a real-life picture of your spending habits, set up your automatic savings, and identify the fun things in life that are necessary to your sanity, then you have to set your limits. Live within your means. Once you have set your priorities, then add up the cost of them, including your savings (never forget to include savings). After that is done, then subtract that number from your income. If the number is a positive, you are doing something right.
Do Not Kill Your Fun
No budget can survive the absence of entertainment. In The Seven Habits of Highly Effective People, Stephen Covey identifies the need to relax and step away from all the hubbub in life. He calls it “sharpening the saw”. Stress in life will break your budget, and everything else for that matter, if you do not take the time to relax. Curtail your entertainment, but do not get rid of it. So many Americans out there fail because they are too conservative with their budgets and do not let themselves have any fun in life.
But Kill Your Debt
There are two schools of thought on this one. In the first, there is prioritizing debt by interest rate. Paying off the debts with the highest rate first will save you the most money, but it tends to be slow. David Ramsey recommends eliminating the smallest debt first and then work your way up to the largest. He calls this the debt snowball. It costs more, but gets it done faster. Do what works best for you. People in debt are not in control of their money. You need a solid plan to extinguish your debt.
Stay With It
Discipline is always necessary to the success of any endeavor. With a budget, you can take control of your money, get out of debt, and build the wealth you need to accomplish your goals. All you have to do is make a plan, and then make a decision to follow it. Only you can prevent a financial disaster. There are many resources out there on the web and in the world that will help you. Get started today. There is not a single reason in the world not to save. It is truly amazing how easy life can be once you take control of your finances.
While getting in control may seem like an impossible endeavor, it cannot become possible until you embrace the present and the power of now. Right now you need to start eliminating debt and start saving for that dream home where debt is a thing of the past. I, Eric Frazier, will assist you now. Call me at 800-401-8994 x 708 or email me at firstname.lastname@example.org to get started on saving toward your dream home. I will help you find real estate and lending programs to make this work for you! The power is now.
Eric Lawrence Frazier, MBA
President and CEO