Tips for Creating an Airtight Budget - Planning for the Future and Making Dreams a Reality
Many people think that the only way to reduce financial risks is to make more money. However many forget that it’s just as important, if not moreso, to manage the money you have. A friend once told me, “it’s not how much money you make, it’s what you do with that money that really counts,” and I truly believe that. Proof of this can be seen in the number of celebrities that earn large sums of money then end up declaring bankruptcy within a few years. Hollywood is filled with stories where people lived beyond their means and did not know how to handle all the money they had and as a result ended up in trouble.
The same can be seen with some lottery winners. Not realizing that large sums of money are just large and not infinite, many end up in a worse financial situation than before they hit the jackpot. These examples make it clear that it really doesn’t matter how much you make, it’s all about what you do with that money once it’s in your possession.
We often hear that â€œno plan is a plan to fail.â€ This means that rather than playing it by ear, itâ€™s best to plan where your money will go ahead of time. In other words, budgets are the key many people use to control their spending and make sure that thereâ€™s enough left over to plan for the future.
A recent article on CNN Money discusses ten things you should know when creating your own budget. Here they are: 1. Budgets are a necessary evil. 2. Creating a budget generally requires three steps. - Identify how you’re spending money now - Evaluate your current spending and set goals that take into account your long-term financial objectives - Track your spending to make sure it stays within those guidelines. 3. Use software to save grief. 4. Don’t drive yourself nuts. 5. Watch out for cash leakage. 6. Spending beyond your limits is dangerous. 7. Beware of luxuries dressed up as necessities. 8. Tithe yourself. 9. Don’t count on windfalls. 10. Beware of spending creep.
While everyone goes about creating a budget in their own way, the key is to develop some type of plan. Rather than making rash decisions, you have a much better chance of making the most of your money by thoughtfully taking informed steps to plan for the present and the future.