Two Forgotten Benefits of Budgeting
| June 11, 2008 | Posted by Roshawn Watson under Uncategorized |
By: Roshawn Watson
This post is the conclusion of the Budgeting: Your Foundation for Wealth series.
Budgeting has often been referred to as the dreaded “B-Word.” Some describe it as arduous and painful because it forces us to silence that inner kid that refuses delayed gratification. However, budgeting is also a tremendous wealth-building tool, and here are two profound but often forgotten benefits of budgeting.
Taking Advantage of Opportunities with Budgeting
All it takes is one idea to significantly impact your life forever. It happens over and over again on CNBC’s The Big Idea: one strong idea can launch a company and a fortune. Instantly, I think of Poof Chairs proprietor Justin D’Angelo. Perceived financial constraints are a major reason people are unable to take advantage of such wonderful opportunities. Make no mistake, whether you make $40,000 per year or $400,000, you can still be broke! By knowing what is going on with your finances, you will be able to appropriately assess the financial risks. It does not matter whether you want to undertake a new venture, upgrade your car, or take that European getaway that you have been ogling over. Do not blindly make financial decisions without a budget: properly assess where you are financially, and what you need to act on the dreams and desires of your heart.
Extra Money
An additional benefit of budgeting is that it almost always seems to free up extra money as you control your finances better. Recall, a budget enables you to control your finances better because it puts the proverbial spotlight on your financial habits. Thus, you can clearly see where your money is going every step of the way. It is somewhat paradoxical that a convention (a budget) that most regard as restrictive ultimately becomes a tool for financial freedom. Some people even say that once they begin to live on a budget they feel as if they have received a raise. This occurs because people identify unnecessary expenditures and begin to eliminate them.
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As I conclude this series, I admonish you to redirect your financial course and bring order to your financial life with budgeting. Systematize your savings, investments, gifts, and expenditures. Remember, barring extraordinary shifts (i.e. gas going up to $10/gallon), one should know roughly how much he will spend this year on clothes, groceries, and shelter. Your family’s financial health may depend on it.
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The Dreaded B-Word
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A nice end to a very helpful series on budgeting. For those of us new to budgeting any recommendations on how to start…My friend says he does it at the end of the month after everything has been paid which seems more like accounting for what you've already done than controlling it from the start to me…
Financial dream,I agree that this is more like accounting. You didn't mention whether your friend is a disciplined spender or not. Anyone willing to account for every dollar may not be in too bad of financial shape. Nevertheless, prospective planning is the still best. I would start with budgeting software (i.e. Quicken or Mint). You could also just use an excel spreadsheet (my personal preference).