WEALTH SKILL #2: Budgeting Your Money
In the first part of the article, it mentioned about understanding your money. If you want to be a millionaire, you need to learn the wealth skill number two, budgeting your money. Rich people do not spend more than what they earn. Instead, they religiously keep a portion of it and let it earn interest. To follow their footsteps, you learn to manage your finances. Unless you learn this important skill, you will never reach the road to financial abundance.
Importance of Budgeting your Money
Budgeting your money gives you knowledge of your earnings and spending. When you a basic knowledge of the whereabouts of your money, you create financial stability which is the crucial step to abundance.
When you know how to budget your money, you develop self-discipline. You are able to control your finances and avoid unnecessary expenses. Learning to budget makes you the boss of your money instead of being a slave to your finances.
Organizes your Finance
Organizing your finances warns you for any potential financial problem. Your budget can serve as a record of all your financial transactions, guide for paying utility bills and immediately warns you when you overspend.
Offer New Opportunities
When you know how to budget your money, you can grab opportunities that you may otherwise miss. Because you know the flow of money, you can exactly determine if you have excess funds to invest to other moneymaking opportunities.
Provide More Cash Flow Money
The greatest benefit of budgeting your money is having extra money. When you cut unnecessary payments like penalties and late interests, you can save up for your future needs. When you pay your bills on time, you not only avoid late charges but also create a good name for yourself and your company.
Earning your first million is challenging and budgeting it according to your needs is more challenging. The key to being rich is to be in control of your finances.
Tips to Budget your Money
Knowing the benefits of budgeting is futile if you do not practice it. To arm you with the competence needed in Wealth skill number 2, here are the tips to help you stay within the budget.
Make a List
When you receive your first million, keep it a habit to make a list of the things that you need to pay. Determine your future expenses and set aside funds for your needs. If you run a business, make sure you separate the working budget of your company. These include money for purchasing, maintenance and salary of your employees. If you do not have a company and only works for yourself or for others, know your expenditures until the next payday comes. Write specifically each item and opposite each, its corresponding amount. This way, you will know whether you are still within your budget or you are exceeding from your earnings.
Separate your Money
For people who are very impulsive when it comes to spending, separating the budget into parts is ideal. You can allocate your funds based on the following:
⇒ Working Budget
Your working budget includes your daily or monthly expenses. Usually, this comprises the biggest share in the budget. This is where you will get the payment for your monthly bills, food, allowance and transportation.
No matter how small your income, savings should be a part of your budget. To be wealthy means to save more than what you spend. Even a meager earner can become rich as long as you save enough for your future. The savings must comprise at least 20% to 30% of your monthly budget.
⇒ Spending Money
Of course, life will be boring if you only work to live and save. Your monthly leisure activities must be a part of your budget. As the cliché goes, “All work with no play, makes a boy a dull one.” Working is more rewarding and fun if you get to treat yourself occasionally. You can get the money for your new clothes, vacation or pampering yourself from the spending money. To avoid overspending, make sure to leave your debit and credit cards at home and stay strictly within your spending money.