Budgeting is one of the least liked but most important aspects of personal finance. It tells you how much money you expect to come in, where you expect your money to go, and where it actually goes. No matter how much money you make, it can quickly disappear without a budget. This is why so many lottery winners and professional athletes end up broke shortly after becoming millionaires.
Simply put, budgeting is defining your priorities and sticking to them. A successful budget requires the income to be more than the expenses. It is both forward looking, projecting future income and expenses and backwards looking, holding you accountable to what you did. Although a budget feels like it constrains, it is your ticket to financial freedom.
A budget is simply your foundation; it takes time and thought to build and track, but it gives you your map to financial freedom. Staring at your map won’t get you to your destination, and a strong foundation won’t put a roof over your head though. How you earn, spend, save, and invest along the journey will determine your ultimate success.
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Identifying needs vs wants makes the budgeting process a whole lot easier. The sooner you realize what a need is versus what a want is, the quicker you will be able to reach your financial goals. Reducing your needs can open a whole new world of possibilities.Keep Reading