Finance 102 – Budgets: How to master your personal finances

You Need a Budget – “Failing to Plan is Planning to Fail

Everyone needs a budget, regardless of their income. Some common myths are: (1) only those people barely making ends meet needs a budget; (2) budgets are restricting; or (3) I’ve tried budgeting and it does not work for me. However, these are myths. (1) Wealthy people budget. More importantly, budgeting helped them get wealthy. (2) Your budget is only as restricting as you choose to make it. (3) Budgeting works, you just suck at it. But don’t worry, everyone sucks at budgeting. It is a skill that must be practiced and refined over time.

What is a budget?

A budget is “an estimate of income and expenditure for a set period of time” according to the dictionary. That’s all it is! You estimate how much money you bring home and what it will be spent on. It sounds simple, right?

Where Should I Begin?

Just start! As Mark twain said, “The secret of getting ahead is getting started.”

Be prepared. Even with templates and techniques, budgeting is difficult. It is a skill that must be repeatedly practiced. You may overestimate how much money you bring home or how many expenses you have. Remember to keep modifying your budget when you find that you underestimated part of it. Later, you will be able to sit down and prepare a budget for a month and not have to correct or reallocate funds in your budget.

In future posts, we will explore successful individual and their systems and methods of budgeting. There is no right or wrong way to budget, unless you are budgeting more money than you make. Find a system that works well for you and stick to it!

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