What is a budget?
Creating a budget and sticking to it is one of the first steps to becoming financially independent. But what is a budget? In general, your budget is your spending plan (for the week, the month, the year, etc.) that is based on how much money you bring in, and how much money you spend. One way to budget your money is to start with setting a goal. Read on for more tips for making a budget and sticking to it.
“To accomplish any goal in life, it’s all about discipline,” counsels Brian Saranovitz, president of Your Retirement Advisor. “Your financial life is no different.”
In the process of building financial discipline in your life, budgeting is the very first step. In every other aspect of personal finance – from shopping to saving to investing to buying a home to retirement planning – your success will depend on your ability to create a budget… and stick to it!
“There is a magic about money,” says financial educator, Tiffany Aliche. “When money is not planned for, tracked, and kept record of, it literally disappears.” Here’s a simple, step-by-step approach to how to make a budget.
How to make a budget step 1: set your goal
Do you want to save for a deposit on a home? Or a beach holiday? Or simply start saving each month for emergencies? Whatever your goal is, it’s wise first to visualise the results of your budget and write it down. By imagining the results and creating a mental picture, you’re much more likely to stick to your budget and achieve your desired outcome.