The word ‘budget’ gets bantered around so much and so often that many people feel they know exactly what it means when in reality they have no clue whatsoever. Not only that but they think they have a budget when in fact they have nothing of the sort (and no substantial savings or wealth either).
The truth of the matter is that a budget is the cornerstone of any solid financial foundation and without it whatever wealth you’re trying to build will crumble at some point, usually when things go bad somehow in your life. The good news is that regardless of your financial situation putting together a budget isn’t that hard to accomplish once you know what really constitutes one.
So, for the uninitiated, a budget is simply a breakdown of how much money you have coming into your household and a plan for where it will go, either towards paying expenses or towards adding to your wealth.
Think about it this way; if a business didn’t know how much money was coming in and didn’t know how much money was being spent they not only wouldn’t know what their profit margin was but they also wouldn’t stay in business for very long.
It’s the same with your money. If you don’t know where it’s going and you don’t really know how much you have it will be very difficult to successfully build any sort of wealth or savings.
One of the reasons people fear ‘going on a budget’ is that they don’t want to have to cut back on all of the ‘fun’ things that they normally purchase, like going to the movies, buying new clothes or having a Starbucks latte every morning.
The truth is, however, that if you really know where your money is going you may not have to cut back that much and, when all is said and done, you may find that you don’t need a lot of the things you once thought you did.
But you’ll never know unless you start. The best advice is to go online and look up some basic budget tools that you can use (most are free) and get going. The quicker you start the quicker you’ll get on the road to real financial freedom.