There’s no getting around it: a budget is a requirement for good money management. There’s no need to have a negative attitude about budgeting. Stop thinking about budgeting as a difficult task or a punishment for being an impulsive spender. And stop thinking about it as a financial diet.
A budget is simply a tool to increase your consciousness of how and where you spend your money. It is also guideline to help you spend your money on the things that are most important to you.
A budget is to successful money management as a rudder is to a ship. Without it you muddle through, unable to stay on course because you have no course charted and you have no equipment for steering through the currents that constantly swirl around you.
Traditionally, many people managed their money by dividing their cash into several paper envelopes. These envelopes are for food, entertainment, utilities, insurance, vacation, etc. They then spent their money from these envelopes. They always knew how much money they had left to spend, and how long it had to last.
Today, there are so-called budgeting tools that can help in creating and sticking to a budget in careful consideration of how much you earn.
What is a budgeting tool?
A budgeting tool is an on-line tool or software that is used to enter expenditures and serves as a guide to follow your budget.
Such a tool is a system that will make the budgeting processes easier and more accurate and can be used to assess operating performance during the year more accurately. These tools for flexible budgeting have been available for years but mostly have been used in other non-service and manufacturing industries.
What are the benefits of using a budgeting tool?
A budgeting tool is a well-managed guideline of everything about your finances. You can find everything you expect in a budgeting tool including retirement planning, estate planning, capital needs analysis, budgeting, what-if scenarios, disability needs analysis, education needs analysis, cash flow and tax planning, balance sheets, among others.
These systems help you to easily create and manage payments so you will never have to worry about another late fee, postage or licking stamps. On-line tools also means easy access to information from anywhere, at any time which allows you to always know exactly how much you have left to spend. At the same time, it will make informed spending decisions based on your budget entries.
There really is no need for you to invest in a fancy budgeting tool in order to do a budget, but a good one will make the job easier.
Many banks are now offering free PC banking and free personal finance software. You simply dial into the bank’s computer or use web-based banking services, and download the checks that have cleared your account, directly into your personal finance software. Then you indicate an expense category for each check.
You can do a basic comparison of budget versus actual expenses by category, or you can enter more detailed information such as investments, assets, liabilities, and print personal financial statements showing your net income and net worth.
Whether you use sophisticated personal finance software or a couple of pieces of paper and a pencil, the important thing is that you get on the road to financial freedom by starting a budget today.
Whatever budgeting tool you choose for your financial planning, the most important thing is that you are planning for your financial future. Making regular savings and investments will pay big dividends down the road. Getting started is the hardest part. Once you have your budgeting tool and a good budget in place, you will wonder how you ever lived without it.
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