I remember saying to my mentor, ‘If I had more money, I would have a better plan.’ He quickly responded, ‘I would suggest that if you had a better plan, you would have more money.’ You see, it’s not the amount that counts; it’s the plan that counts.” – Jim Rohn
A budget is a plan you create indicating how to spend your resources such as time, money, and even relationships. Budgeting helps you determine, in advance, how to use your resources and has the potential to make sure you never run out of them. Essentially, the key to budgeting is to follow “The Plan.”
Budgeting is the difference between having and not having. There are several reasons regarding the importance of creating and following a budget. First of all, budgets let you know how to increase your earning capacity. It gives you control over your life and future and even prepares you for an emergency. By relieving financial stress and gaining financial freedom, budgeting helps you reduce wasted and unnecessary spending.
There are several methods to employ when budgeting. First of all, list your income by calculating your monthly income and your revenues. The key here is to be honest with yourself by asking, “how much do I really have?” The next step is to make a detailed list of all outgoing expenses. These would include bills, groceries, utilities, loans, childcare expenses and any other incurred costs. Eating out, items purchased and even mental health needs should be listed. It may be helpful to use an excel spreadsheet or a visual representation of your financial situation.
Spend as much time as you need to create your budget, but be honest with yourself.
Even if your budget leaves you in a deficit, the goal is to increase your earnings, so relax. If you are overwhelmed with the process, seek the help of a financial advisor or money manager Remember that you are not alone; you just need to do the research.
“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn.
With a good plan in place, a deficit can become surplus, so you may need to adjust your spending habits, increase your earning potential and live the plan you have created. There may be times when you need to review your mindset and adjust and align various aspects appropriately. There are some healthy mindsets to consider regarding money. For instance, it is possible to achieve your financial goal. Also, know that you have the freedom to spend, but you alone can choose not to purchase an item. Know that budgeting is normal and you hold the key to your success. It does not limit freedom; rather, gives you freedom to do more. If you lack knowledge regarding budgeting tips, seek the correct information to make good decisions. And remember that you don’t need to overspend to prove a point to anyone.
Budgeting is important for the long term. Having a budget or spending plan for the next 5-10 years should be put in place and with a focus in mind, it is easier to keep to your budget.
In conclusion, budgeting is a tool to help you achieve and maintain financial freedom whether you are saving or spending. Financial freedom is a state where you have enough money and resources to choose the lifestyle you want with enough time to do what is important to you. Follow your plan for success.
Tayo Elnathan is the president of LCCMedia Foundation