Budgeting scares most people. It is very, very emotional, and for many people, the hardest thing they have ever tried in their life. Some people don’t even understand what a budget is!
The first thing to understand about a budget is that it is not something that is there to restrain you, it is there to give you freedom and to empower you.
The definition of a budget is:
1: a sum of money allocated for a particular purpose; “the laboratory runs on a budget of a million a year” 2: a summary of intended expenditures along with proposals for how to meet them; “the president submitted the annual budget to Congress”
How on earth does that relate to an individual? If you have read some of my other articles, I believe everyone is self-employed, therefore to look after your finances is no different than running a business or a country. It’s called “Fiscal Responsibility”.
A budget is a tool, it gives you information and understanding about how you spend your money. Once you have that, you can truely do great things, even with a small amount of money. Check out “The Richest Man In Babylon“.
There are five basic rules for a successful personal or household budget.
1. Be Honest With Yourself
2. Keep it simple
3. Don’t stop just because you didn’t follow your budget for a while
4. Entertainment is a valid budget item
5. Update it regularly
I will be going over these five important rules as we work through the budget processes in the next article.
Before we get into that, you can help yourself now by starting to write down everything you spend money on. Keep small notebook and write down everything. If you go to the corner store and buy an icecream, write it down.
Here is something to think about while you fill in your notebook:
Take a second look at what appears to be someone’s “good luck.” You’ll find not luck but preparation, planning, and success-producing thinking…
– David Joseph Schwartzbudgets