So, yesterday I mentioned two important financial tools to help you get to where you want to go. They included net worth statement and a budget. I went into some detail about the net worth statement yesterday in Episode 663 and today I want to focus on the budget today and how it can help you get to your ideal life. I also made available some samples and templates of each that you could get by going to www.mindingyourmoney.org and clicking on Episode 663 or todays Episode 664.
So, what exactly is a budget and how can it help you? Simply put, a budget is an itemized summary of likely income and expenses for a given period. It helps you make decisions about how you want to spend your money. You can use a spreadsheet, an online service like www.Mint.com or www.YNAB.com, or software like Quicken. A budget provides a concrete, organized, and easily understood breakdown of how much money you have coming in and how much is going out. It’s helps you prioritize your spending and manage your money—no matter how much or how little you have.
Planning and monitoring your budget helps you identify expenses that waste money, find hidden money, adapt quickly as your financial situation changes, and achieve your financial goals. When you actually see the breakdown of your expenses, you may be surprised by what you find. Creating a budget can also decrease your stress levels because, with a budget, you don’t have to panic or wonder if you have the money for unexpected expenses or items to treat yourself—you already know. However, if the goal is to reach a specific destination then a budget will show you how much you have available to put toward that goal. And, that’s why it’s so important in analyzing your current situation.
And that’s the minute for today.
Don’t forget you can download net worth and budget samples and templates as well as other resources at www.mindingyourmoney.org at Episode 664.
Thanks for listening and as always remember that minding your money really is the path to a richer life!