Plan What You'll Spend and Spend What You Planned

Do you often reach the end of the month without enough money to cover all of your spending? Do you really know how much you are spending each month for discretionary expenses? Are you using credit cards to buy things you desire each month and not paying off the amount you charge? If you answered yes to any of these questions, then our topic today is definitely for you. There is an essential yet simple tool that can help us all better manage our spending habits. Many people resist the task of creating a personal budget to manage their personal finances. However, creating a budget may be the single most important step you take towards a healthier financial future.

Contrary to popular belief, living from a budget is not about deprivation and giving up all the things you desire. It is a tool that allows you to improve your ability to actually live within your means and make responsible decisions with whatever amount of money you have right now. Essentially, a budget promotes the practice of spending only on things you can pay for in cash which is one of the most essential habits to develop to build a legacy of wealth for yourself and future generations of your family. This tool is important for people of all income levels – we are all way too familiar with stories of those who have earned substantial amounts of money and lost everything. Those with substantial incomes are still at risk of persistent over-spending if they don’t create the habit of living within their means.

There certainly are situations where individuals or families experience financial distress due to conditions like lower paying jobs and major setbacks outside of their control. However, for many, the financial challenges experienced are caused by negative spending habits rather than an income issue. A budget is a great tool that simply summarizes all expected income compared to all known expenses and obligations for each month. It’s important to point out that for many people, the majority of our monthly spending is known and not a surprise. If you go through the process of creating a personal budget, you will have a much better idea of how much you can really spend on the fun things you want to enjoy! Further, you can determine what you have available to save for various uses or pay-off debt. In fact, you might even find that you have expenses you can reduce or eliminate once you really take a close look at your budget and set financial goals.

The process of creating a budget can be as simple or as complex as you prefer. It can be as simple as a pen and paper along with a calculator or it can involve a more complex spreadsheet or online program. Don’t let your money just slip away month after month without any planning. In other words, plan what you will spend each month and then, spend what you planned!