The basics of budgeting for wealth, health and happiness

The basics of budgeting for wealth, health and happiness

Budgeting is the first step towards financial planning. Includes a series of questions about how you spend your hard-earned money. And being responsible for your inputs and outputs is a healthy exercise to strengthen your ability to save and plan for your future.

Having a budget helps us to live within our means and to avoid spending more than we earn.

Although long-term work may be needed in the beginning, budgeting will provide you with the financial stability you need to gain wealth and, just as important, peace of mind.

3 good reasons to make a budget

The importance of budgeting varies depending on many factors. Although not everyone needs to budget equally, there are key situations to consider.

  1. Organize your finances. If the financial records are a mess, you need a budget. You need to understand the ins and outs of this mess and start looking at where your funds are going.
  2. Maintain financial goals. Create a realistic goal by living and subscribing to an initial budget. You can get a real financial plan by learning what is affordable and what is not.
  3. Retirement plan. Everyone needs to budget for retirement. Salary checks will inevitably stop and you will have to rely on social security, investment or a pension. The question is, how much do you need to retire? The answer is the amount of your assets needed each year to live. And the only way to get that answer is to budget.

Setting a budget is a good habit

Creating a budget is always a good idea. But being responsible for your finances and spending habits can be daunting for some, while for others it is natural.

Given that not all budgets are equal, here are some tips to get you started. The goal is to understand why and how to budget based on your profile.

Why you might need to create a budget

It is wise to create a budget in different circumstances. Some of the main reasons for managing your finances are:

  1. Stay away from debt.
  2. Understand retirement finances.
  3. Save for significant expense.
  4. Understand what you can afford.
  5. Find out where you spend your money.

Those who do not budget

There are two distinct categories for those who need to create a budget and those who do not. While both groups may enjoy financial responsibility, the first group – those who bury their heads in the sand – really need a budget. The second group – those who are considered wealthy – could probably escape without one.

Those who feel uncomfortable with their finances generally have similar concerns. They often have a lot of debt, are embarrassed by their lack of savings, may have an over-spending husband, or, as they say, may think that “ignorance is happiness.”

At the opposite extreme are very rich individuals who do not have to budget. This group earns enough to save and spend at their discretion, has huge assets or inherits. Thus, they are not worried about their current finances.

Where to start when creating a budget

Creating an effective budgeting strategy depends mainly on the individual. Some create spreadsheets and update them daily with what and where they spend, then reconcile these monthly worksheets to stay on track.

There are also budgeting software programs, such as Quicken or Mint, or proprietary software created by financial advisors to attach credit cards and bank accounts. These services track and classify your expenses, and yet intuitive, they still require human touch to ensure accuracy.

Some people budget by creating multiple bank accounts for designated monthly expenses, such as personal, home, and savings. They pay into these accounts at each payment period. Others used the very simple envelope budgeting method.

Then there is the automatic budget. This person knows what to put aside for retirement and savings in college and stays on track monthly and annually. From there, they spend the rest.

The next step is financial planning

Now that you have a general understanding of the importance of creating a budget, your next step is to make a budget yourself! You may also want to consider seeking the help of an experienced financial planner. This person can help you to save money so that you have more money over time.

The goal is to live your best life to the best of your ability, so that when it comes time to retire, you can continue to live the quality of life you had while working. The best motto for retirement is to do it in wealth, health and happiness.

President, Partner and Financial Advisor, Diversified, LLC

In March 2010, Andrew Rosen joined Diversified, bringing with him nine years of experience in the financial industry. As a financial planner, Andrew builds lifelong relationships with clients, instructing them at all stages of life. He obtained his 6, 7 and 63 Series, along with property / health and life / life insurance licenses.

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